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               13 N.C. J.L. & TECH. ON. 165 (2012)


                           Stephanie L. Kimbro*

The spread of disruptive technologies to the legal profession is
changing the dynamic of how law firms are structured as well as
the value propositions associated with the delivery of legal
services. The number of law firms with a national presence has
grown due to the cost benefits and efficiency of using cloud
computing. New models for expansion across jurisdictional
boundaries are increasing. However, the regulatory barriers to
create these new firm structures are numerous and costly. This
paper reviews the evolution of technology in multijurisdictional
firms and examines the primary regulatory barriers to their further
development. A starting point for standardization of regulations is
proposed as well as potential first-steps to removing barriers to the
growth of multijurisdictional virtual law firms.

                       I. INTRODUCTION
    New methods of providing legal services online through the
use of technology, specifically cloud-based applications, in law
practice are adding to the growth of multijurisdictional law
practices (“MJP”) in the United States.1 Many of these practices
are also virtual law firms, which may or may not have fixed

   * Stephanie L. Kimbro, M.A., J.D., is the co-founder of Virtual Law Office
Technology, LLC (VLOTech), which was acquired by Total Attorneys in the
fall of 2009 and the owner of Kimbro Legal Services, LLC, a North Carolina
virtual law office.
     The author of this article is aware of the growth of international
multijurisdictional practice and the breadth of scholarship on that topic, but will
instead focus this article on the more recent growth of multijurisdictional law
firms within the United States. These firms have spread from being limited
primarily to larger law firms and now include solo, small, and medium sized
                     13 N.C. J.L. & TECH. ON. 165, 166
                            Regulatory Barriers
geographic locations or be bound by geographic borders. 2 The
primary difference between a MJP and a virtual practice is that
attorneys in a virtual firm deliver legal services to clients directly
over the Internet and communicate with firm members, co-counsel,
and in some cases opposing counsel, through secure online
interfaces.3 Because the delivery of legal services is online and the
structure of the firm may not be physically tied to a single
geographic location, ethical issues unique to this model may arise.4
    The spread of disruptive technologies to the legal profession is
changing the dynamic of how law firms are structured, and it is
also changing the value propositions associated with the delivery
of legal services to the public.5 The growth of law firms with a
national presence is increasing due to the cost benefits and
increased efficiency of using cloud computing. 6 These factors
encourage firms to adopt new models for expansion across
jurisdictional boundaries.7 Not only are larger law firms engaging
in MJP, but smaller and medium-sized firms are also able to use

     Law firms that do not maintain a physical law office locations are sometimes
referred to as “pure-play” virtual law office models, while law firms that
maintain brick and mortar law offices for business purposes and integrate virtual
law offices into the structure of their practice for the purpose of delivering legal
services online and collaborating with firm members are referred to as “hybrid”
virtual law offices.
     See, e.g., Mary C. Daly, Resolving Ethical Conflicts in Multijurisdictional
Practice—Is Model Rule 8.5 the Answer, an Answer, or No Answer at All?, 36
S. TEX. L. REV. 715, 719–20 (1995).
     See id.
NATURE OF LEGAL SERVICES 93–98 (2008) (discussing the impact of disruptive
technology on the legal profession).
CLOUD COMPUTING 2 (2011), available at
     See generally Catherine A. Rogers, Lawyers Without Borders, 30 U. PA. J.
INT’L L. 1035 (2009) (discussing the effects of Rule 8.5 on international law
firms); Carole Silver, What We Don’t Know Can Hurt Us: The Need for
Empirical Research in Regulating Lawyers and Legal Services in the Global
Economy, 43 AKRON L. REV. 1009 (2010) (discussing the effects of new
regulations on cross-border practices).
                   13 N.C. J.L. & TECH. ON. 165, 167
                          Regulatory Barriers
technology to participate in the global economy.8 In addition to
changes being implemented by firms, clients are demanding that
their law firms use cloud computing as a form of cost savings and
    While larger law firms have exchanged information with
clients through extranets for years, these interactions are based on
a virtual private network (“VPN”) where clients are able to access
portions of their files and communicate with attorneys through the
firm’s network.10 More recently, some law firms have developed
customer client portals that operate through the use of cloud
computing and, more specifically, through the use of one form of
cloud computing known as Software as a Service (“SaaS”).11 The
use of a client portal is common in banking and other industries
where online communication must be handled in the most secure
environment with the user creating their own unique username and
password and communicating through an encrypted portal.12 With
this method, data transmitted through the client portal is stored by
a third-party company on servers housed in its data centers around
the United States or located in other countries.13 The sharing of

     See infra Part II–III (discussing MJVFs of various sizes). See generally
Carole Silver, Regulatory Mismatch in the Market for Legal Services, 23 NW. J.
INT’L L. & BUS. 487 (2003).
available at
      See Stephanie Crawford & Jeff Tyson, How VPNs Work, HOWSTUFFWORKS, (last visited Mar. 13, 2012).
      See Robert S. Ellinger, Service-oriented Architecture and User Interface
Services: The Challenge of Building a User Interface in Services, NORTHRUP
GRUMMAN TECH. REV. J., Spring/Summer 2007, available at
SS_Ellinger.pdf; Stephen T. Taylor, Cloud Computing is Slowly Making Inroads
into the Legal Profession as Security Worries Begin to Wane, 30 OF COUNSEL 1,
2 (May 2011).
(2011), available at Westlaw SOITL § 14.03.
                    13 N.C. J.L. & TECH. ON. 165, 168
                           Regulatory Barriers
data with third parties not associated with the law firm raises new
ethics issues.14
     Attorneys in the United States are subject to compliance by
fifty-one different jurisdictions, each with differing rules and
regulations regarding the use of technology in law practice.15 If a
lawyer attempts to practice law in more than one state, he or she
must juggle the regulations of multiple state bars and regulatory
entities. 16 Many times, the rules themselves are vague or not
updated to reflect the realities of cloud computing and
ecommerce. 17 Only a few states have published ethics opinions
specifically related to cloud computing or third-party hosting of
law office data. 18 For a law firm that wants to create a
multijurisdictional practice, the barriers may be numerous and
costly to meet multiple state compliance. 19           Accordingly,
traditionally only large firms have been successful at creating
MJPs because current rules tend to favor large firms. 20 While
nonlawyer owned legal service providers, such as LegalZoom 21

      See infra Parts II–III.
      Id. at 722.
      For example, most states have published ethics opinions related to the use
of unencrypted email and several have addressed hidden metadata in electronic
communication. See, e.g., ABA Standing Comm. on Ethics and Prof’l
Responsibility, Formal Op. 99-413 (2010); Alaska Bar Assoc. Ethics Comm.,
Ethics Op. 98-2 (1998); D.C Bar, Op. 281, available at
         See Mass. Bar Ethics, Op. 05-04 (2005), available at
05-04; Me. Bd. of Overseers of the Bar, Formal Op. 183 (2004), available at
       See Daly, supra note 3 (stating “[t]he likelihood of conflicts among
professional standards has increased considerably as a result of the
modifications made by individual states in adopting the Model Rules of
Professional Conduct.”).
       Id. at 727–28; Stephen Gillers, Lessons from the Multijurisdictional
Practice Commission: the Art of Making Change, 44 ARIZ. L. REV. 685, 697
(2002) (explaining how ABA Model Rule 7.5(b) benefits larger firms in terms
of expansion across jurisdiction).
      LEGALZOOM, (last visited Feb. 2, 2012).
                    13 N.C. J.L. & TECH. ON. 165, 169
                           Regulatory Barriers
and Rocket Lawyer,22 face the risk of unauthorized practice of law,
they may not have the same restrictions in their ability to provide
basic legal documents, forms, and guidance to the public across the
country.23 Often attorneys and law firms are not sure where to turn
when faced with contradictory regulations regarding the setup and
operation of a cross border law practice.24
    Taking questions to a formal ethics committee for review at the
state level may take a year or more and may result in an opinion
that fails to provide practical guidance.25 Approaching malpractice
insurance carriers about the issue may produce a similar result, a
risk of losing coverage, or additional hurdles to jump through to
obtain coverage. 26 Some firms—solo or small firm practices in
particular—are operating despite the lack of clarity and may need
to go to greater lengths to find a malpractice carrier.27
    With the increase in the use of technology to deliver legal
services and the growth of law firms that are offering international
and multijurisdictional legal services, a greater standardization of

      ROCKETLAWYER, (last visited Feb. 2, 2012).
      See discussion infra Part IV.A.
      See Daly supra note 3, at 719–20.
      See Beverly Michaels, Unbundling in the 21st Century: How to Reduce
Malpractice Exposure While Meeting Client Needs, OREGON ST. B. BULL.
Aug./Sept. 2010, available at
10augsep/practice.html (noting that when a lawyer unbundles and does not have
a physical law office location, there is a special provision in the professional
liability fund (“PLF”) that the lawyer must comply with in order to qualify for
coverage); see also Richard Granat, Best Practices for Virtual Practice,
ELAWYERING BLOG (Jan. 10, 2009),
2009/01/articles/virtual-law-practice/best-practices-for-virtual-law-firms/ (“In
some cases it has been reported that malpractice insurance carriers have declined
coverage when a law firm attempts to provide legal services directly through
their web site.”).
OF CLOUD COMPUTING IN LAW PRACTICE 3 (Jan. 15, 2011), available at
cloudcomputingguidelines05.30.2011.pdf (noting that “[t]he malpractice policy
of the law firm may not provide coverage for data loss, and to secure a separate
policy for this kind of coverage may be prohibitive, particularly for solo
practitioners and small law firms.”).
                    13 N.C. J.L. & TECH. ON. 165, 170
                           Regulatory Barriers
the regulations governing lawyers across borders is clearly
needed.28 Existing regulations perpetuate geographic-based rules
in an age of globalization where almost every industry increasingly
relies on ecommerce.29 These barriers to the growth of MJPs do
not serve the interests of a legal profession struggling to adapt to a
changed legal marketplace and recessionary economy. 30
Additionally, these regulations do not serve the interests of a
public seeking more affordable access to justice.31
    This paper will examine the evolution of technology in
multijurisdictional firms in Part II. Part III will examine each of
the primary regulatory barriers to the further development of
multijurisdictional virtual law firms (“MJVF”) and propose a
starting point for standardization of regulations that will provide
guidance to attorneys. Part IV will examine the progress made by
the American Bar Association (“ABA”) Commission on Ethics
20/20 to address the potential need for changes to the Model Rules
as they relate to the use of technology used by MJVF and Part V
      See Daly, supra note 3, at 719–20.
      According to Forrester, online retail sales in the United States grew 12.6%
in 2010, reaching $176.2 billion. With an expected 10% compound annual
growth rate from 2010 to 2015, Forrester reports that eCommerce in the United
States is expected to reach $278.9 billion by 2015. Sucharita Mulpuru, US
Online Retail Forecast, 2010 To 2015: eCommerce Growth Accelerates
Following “The Great Recession”, FORRESTER RESEARCH 1 (February 28,
      See Jennifer Smith, Stark Choice for Lawyers—Firms Must Merge or Die,
WALL ST. J., Jan. 20, 2012,
52970203750404577171153838217514.html; see also Tom Huddleston Jr.,
Hildebrandt/Citi Report Sees Legal Market Growth Lagging Again in 2012, THE
AM. L. DAILY (Feb. 15, 2012),
2012/02/hildebrandt-client-advisory.html.        See generally Daniel Thies,
Rethinking Legal Education in Hard Times: The Recession, Practical Legal
Education, and the New Job Market, 59 J. LEGAL EDUC. 598 (2010).
2011), available at
nitial_resolution_and_report_for_comment.authcheckdam.pdf           (stating  that
“…the Commission found that lawyers who have such practices can offer legal
services efficiently and effectively and can improve access to justice.”).
                    13 N.C. J.L. & TECH. ON. 165, 171
                           Regulatory Barriers
will consider some potential first steps to removing barriers to their

    Multijurisdictional law firms are not new. These firms have
office locations in a number of different states with attorney
members of the firm working in each branch.32 Legal matters that
come into the firm are referred out to the attorney in the
appropriate state to avoid the unauthorized practice of law and to
be physically close to the court where any litigation might
transpire.33 Traditionally, if the client was not able to physically
visit the law office, the client and lawyers would conduct
telephone calls, send email, or travel to the client’s location.34
    However, clients increasingly prefer to communicate online
and expect their law firm to use cloud computing services to
provide them with the conveniences they receive from their other
professional relationships, such as when they invest, bank, and
conduct other secure and professional transactions online. 35
Clients are also expecting their law firms to unbundle legal
services, especially firms that work with corporate clients who may
have in-house counsel and retain the services of an outside law
firm to provide expertise in an area of the law or extra legal
assistance for a limited project. 36 Clients know that unbundled,
cloud-based services from either an outsourced provider or an
associate within the firm will cut the costs of their legal services.
      Daly, supra note 3, at 726–27.
      Id. at 730–31.
      KIMBRO, supra note 9, at 44.
      Unbundling is a practice where a firm restricts the amount of representation
it provides a client. See Correy Stephenson, Unbundled legal services
increasingly popular, LAWYERSUSA (May 29, 2009), http://lawyersusa;
see also Qualcomm, Inc. v. Broadcom Corp., No. 05cv1958-B, 2010 WL
1336937, at *2–*4 (S.D.Cal. Apr. 2, 2010) (sanctioning for “massive discovery
failure,” which the judge found to be a result of the lack of communication
between in-house counsel and the lawyers retained to conduct unbundled legal
services to assist in the discovery process for the case).
                    13 N.C. J.L. & TECH. ON. 165, 172
                           Regulatory Barriers
Consequently, they have put pressure on larger firms to provide
these services.37 Associates in law firms understand the benefits of
working remotely from the office and appreciate the work/life
balance that can be found through the flexibility of cloud
computing solutions to work online. 38 For a number of years,
attorneys have used software such as LogMeIn39 or GoToMyPC40,
to give them the freedom to leave the law office and work
remotely. 41 As new MJP firms use technology to deliver legal
services online, current regulations of cross-border practices
should be reevaluated, and new regulations established.
    One of the first structures of a multi-jurisdictional virtual
practice (“MJVP”) is a law firm that forms from a conglomeration
of lawyers and administrative staff who pool their resources for the
purposes of marketing, branding and administrative costs.42 In this
structure, firm members do not live in close geographic location to
each other.43 Consequently, they may own or lease a single office
where the primary partners work or may lease smaller branch
offices in larger cities for the benefit of firm members who work
from home and need to meet with clients in person.44 Members of
the firm communicate with each other using cloud-based
technology, typically within secure, encrypted environments and
do not meet regularly in person but through teleconferencing or
video conferencing. 45 This structure of MJVP does not directly
market to the public as delivering legal services online, and many
retain brick and mortar law offices or leased, shared office space to
meet with clients in person. 46 When working with clients, firm
members may simply use email communication in addition to
     See Stephenson, supra note 36.
     LOGMEIN, (last visited Feb. 10, 2012).
     GOTOMYPC, (last
visited Feb. 10, 2012).
     See infra text accompanying notes 43–47.
     See International Legal Tech. Org., The Reality of a Virtual Law Firm, PEER
TO PEER, June 2010, at 68, 68–70.
     See id.
     See id.
     See id.
                    13 N.C. J.L. & TECH. ON. 165, 173
                           Regulatory Barriers
more traditional methods, reserving use of cloud-based technology
for in-house communications.47
    Both the lack of overhead and the potential to attract top legal
talent nationally and globally will allow virtual law practices to
grow quickly without forcing lawyers to relocate to a particular
jurisdiction.48 Virtual law practices create a more diverse, multi-
faceted firm that can cater specifically to client needs.49 As more
firm-client development relies on e-commerce and does not
recognize geographic boundaries, this form of virtual law firm may
become the consumer’s popular alternative form of legal services,
especially for corporate and business clients.
    One of the first examples of this structure of MJVF is VLP
Law Group, LLP.50 This firm was founded in July 2008 to provide
an alternative form of law practice for its partners and associates
that offered flexibility in scheduling, better quality of life for its
members, and a way for its lawyers to pool their resources as a
single firm working remotely.51 The more than thirty lawyers in
this firm are responsible for procuring their own office space or
may work from home.52 Another example is FSB FisherBroyles
Legal based in Chicago.53 The firm’s more than fifty lawyers work
in a similar structure and keep a percentage of the collections that

      See id.
      See generally William D. Henderson & David T. Zaring, Young Associates
in Trouble, 105 MICH. L. REV. 1087, 1088–89 (2007) (discussing associate
satisfaction and retention at law firms based on data covering the firm’s
profitability, reputation, the hours required for associates and other data
associated with lawyer retention in the traditional law firm without the form of
flexibility and work/life balance that a MJVP provides for its members).
      Daly, supra note 3, at 731.
      VLP L. GRP. LLP, (last visited Feb. 10,
      See Eric Young, Law Firm abandons offices to cut costs, SAN FRANCISCO
BUS. TIMES (July 27, 2008),
      See Will Boye, Attorneys say virtual law firms allow them to bill fewer
hours, cut costs, COLUMBUS BUS. FIRST (Oct. 11, 2010),
      FSB FISHERBROYLES LLP, (last visited Feb. 14, 2012).
                    13 N.C. J.L. & TECH. ON. 165, 174
                           Regulatory Barriers
they bring in to the firm.54 On a smaller scale, in British Columbia,
Heritage Law’s seven firm members work remotely, collaborate
using technology, and work with clients online.55 While a large
focus of VLP Law Group and FSB Legal is devoted to corporate,
business, and intellectual property-related practice areas, Heritage
Law’s attorneys provide estate administration, estate planning,
mediation, and family law services.56 The lack of overhead costs
associated with a traditional firm allows the lawyers to cut their
costs for legal fees. 57 Other virtual firms using remote desktop
access methods58 have formed that use the same model of a virtual
law firm rather than operating multiple branch offices to expand.59
    The next step in the evolution of the virtual law firm is the
addition of client extranets, which provide secure, yet limited,
access to clients primarily for the purpose of sharing documents.60
Law firms using this model will email their clients to communicate
and use a client extranet or other cloud-based service to download
or upload large documents for the client to review or sign and
return.61 Additionally, a MJVP may use video conferencing tools
in addition to document sharing to communicate with their
clients.62 However, the primary form of communication remains
unencrypted email exchange and phone calls.

      HERITAGE L., (last visited Jan. 17, 2012).
      Daly, supra note 3, at 731.
      Remote access is the ability to get access to a computer or a network from a
remote location. Charles Boldwyn, Remote access, SEARCHMIDMARKET
SECURITY (2000),
      E.g., ADVOCATES L. GRP., (last visited Jan.
17, 2012); RIMON LAW, (last visited Jan. 17, 2012).
      Communicate and Collaborate, ROBINS, KAPLAN, MILLER & CIRESI LLP, (last visited Feb. 22, 2012) (“An extranet is
a private, secure web site that, while available over the Internet through a
browser, can be used only by persons to whom the necessary permissions have
been given, typically co-counsel and clients.”).
      See id.
                   13 N.C. J.L. & TECH. ON. 165, 175
                          Regulatory Barriers
    In the past several years, MJVFs have begun to invest in
customized client portals that rely on SaaS applications to provide
a variety of features to their clients for interaction that goes beyond
the client extranet model. 63 Collaboration with other attorneys,
with co-counsel, and even with opposing counsel in limited
circumstances, now takes place online through these applications
which are encrypted and far more secure to transmit confidential
legal information than unencrypted email or cell phone calls.64
    Why is the evolution of the structure of a MJLF into a more
“virtual” model important? The use of cloud computing methods
to communicate sensitive law office data across borders implicates
different regulations regarding confidentiality and data privacy.
Additionally, the use of these technologies enables attorneys and
clients who are located in different geographic locations to work
together on legal matters that may or may not be related to the state
in which either the attorney and/or the client are physically located.
Because existing regulations are based on geography, this creates
potential ethical dilemmas for lawyers wanting to form or become
a member of a MJVF.

                “VIRTUAL”?: A FEW CASE STUDIES
    Virtual law practice may take many forms depending on the
technology that a lawyer or law firm has chosen or developed to
use in practice.65 However, the key component of a virtual practice
is the delivery of legal services through the Internet from the
lawyer to the client through a secure client portal.66 Security in the
context of a client portal means that the website where the client
registers and works with the lawyer is encrypted. The data that is
stored online is stored in a server that is hosted by companies that
house its servers in a Tier 4 data center, the most secure form of

    See, e.g., CLEARSPIRE, (last visited Feb. 22, 2012);
HARGROVE MADDEN, (last visited Feb. 22, 2012).
    See id.
    See discussion supra Part II.
                 13 N.C. J.L. & TECH. ON. 165, 176
                        Regulatory Barriers
data center. 67 This means that the law office data may be
transferred through two different third-party providers. Typically,
law office data is stored on a server that is housed in a data center
owned by a company. The law firm’s SaaS provider leases server
space from that company. The terms of that lease are covered in a
separate agreement between the SaaS provider and the company.
The law firm must be aware of the terms of their SaaS provider’s
agreement with the company that owns the data center because this
may affect the access and confidentiality of the law office data as
well as the terms of the service level agreement or user agreement
held with the SaaS provider.68
    In the most ideal scenario, the technology vendor has chosen a
hosting company that provides geo-redundancy of servers, which
means that if something were to happen to the data center in one
geographic location, the data would already be backed up and
housed on a server in another data center that was not affected. At
a minimum, the technology provider ensures that the data center
backs up the data at a remote location on a daily basis. The data
that is being transferred into the hands of typically two other
parties outside of the law firm is encrypted on transfer and at rest.
The service legal agreements (“SLA”) or user agreements with the
technology providers is closely scrutinized by the law firm in
making a technology decision and governs issues such as
confidentiality and accessibility of the data. Once the portal is
active, the features available to clients may include the following:
text-based discussion, real-time chat, web-conferencing, storage of
legal documents for upload and download, calendaring, billing and
invoicing, guided forms that walk the client through questions
pertaining to their legal issue, and other document assembly or
automation systems that facilitate the creation of legal forms for
the law firm to review and work with the client. As trends in
online communication evolve, the development of additional

    See id.
8, 18–21 (2011), available at
                   13 N.C. J.L. & TECH. ON. 165, 177
                          Regulatory Barriers
features is being added to the wish lists of law firms with virtual
    From the law firm’s perspective, the SaaS technology provides
the firm with a variety of web-based practice management
capabilities. Again, this varies with the technology the firm has
customized for its practice or to which technology service the firm
has chosen to subscribe. Some of these features might include the
following: case and client management systems, document
assembly and automation, billing and invoicing, calendaring and
ticker systems, tasks, firm-wide communications, legal research
and law libraries, document storage, contact databases,
permissions-based management features for associates, paralegals
and other staff that may be using the system to work remotely, and
other administrative features.

A. Technology-Focused Model
    There are several different structures of MJVP that have
launched in the United States. The first and most well-known is
the virtual law firm structure that focuses less on the online
delivery of legal services and more on the use of the technology to
create a conglomeration of lawyers that are able to work remotely
while pooling their financial resources, experience, client books
and referral sources. VLP, Rimon Law, and Axiom Law are
examples of this structure of MJVP, which provides a secure portal
for its lawyers to communicate with each other and with their
clients. 69 Rimon and Axiom recruit lawyers from top-tier law
schools who have worked for national “BigLaw” firms and are
seeking greater flexibility, work/life balance, and increased
freedom to grow in their practice area without the constraints of a
traditional law office.70 In the past, law firms have trained new

     See, e.g., Rimon Law Docs, RIMON, (last
visited May 4, 2012); VLP L. GRP. LLP supra note 50; ADVOCATES L. GRP.,
supra note 59.
      See Law Firm Evolved, RIMON,
evolved (last visited Mar. 28, 2012) (“Rimon attorneys are accomplished
practitioners who previously served as senior members of the world’s leading
law firms as well as in-house general counsel for major international
                    13 N.C. J.L. & TECH. ON. 165, 178
                           Regulatory Barriers
associates by allowing them to work on client cases and would
pass the cost of training off to the client in the form of increased
legal fees for the additional time it takes a less experienced lawyer
to complete the task. 71 Alternatively, the firm would have an
associate complete a task for a client for training purposes priced at
a higher billable rate than a paralegal or assistant could have
accomplished at a much lower billable rate. 72 Clients are more
empowered in recognizing that a portion of their legal fees are
going toward the training of associate lawyers and, consequently,
some clients are refusing to work with law firms that will place
new associates on their case.73 Many of the developing MJVFs are
able to build a base of more experienced lawyers and depend on
virtual paralegals, virtual assistants, and legal process outsourcing
to make up the work that they do not wish to handle for the client.

B. Alternative Billing Methods Model
     Other newly formed MJVFs combine the cost savings of cloud-
computing with offering alternative billing structures, such as
value billing, fixed fee, contingency, a combination of billing
practices, and value adjustments by clients, all of which reject the
traditional lawyer billable hour method of calculating legal fees.
These MJVFs redefine the structure of law firm collections and
shift the focus of law practice management toward a more client-
centric model.
     One example of a MJVF that has implemented alternative
billing methods with a virtual practice is Clearspire, based in
Washington, D.C.74 Launched in 2010, Clearspire takes advantage
     See David Segal, What They Don’t Teach Law Students: Lawyering, N.Y.
TIMES, Nov. 19, 2011, at A1, available at
     See id.
     See id.; see also Marianne Purzycki, Modest Rate Increases Predicted
For 2012, HILDEBRANDT INST. (Dec. 21, 2011),
tag/first-year-dilemma/ (“[I]n today’s buyer’s market, clients are still pressing
for more control over pricing and staffing decisions, which continues to put a
ceiling on rate hikes.”).
     See The New Model, CLEARSPIRE, (last
visited Jan. 23, 2012); see also Ron Friedmann, A New Model Law Firm—A
                    13 N.C. J.L. & TECH. ON. 165, 179
                           Regulatory Barriers
of Washington D.C.’s allowance of nonlawyer ownership in law
firms75 and combines three equally held elements to the firm: a
law firm with a national reach, a business management company as
a separate legal entity, and a technology platform that allows them
to communicate with each other and clients.76 According to the
firm’s website, the firm structure reorders the valuation of work
that a lawyer provides to his or her clients over the amount of legal
fees the firm receives for overhead expenses, attorney
compensation, and partner profits.77 The focus of law practice is
re-centered on the client’s needs, close collaboration among
professionals through the use of technology, and the actual practice
of law by the firm’s members.78 This is a clear shift away from
firms’ traditional focus on billing, collections, and tracks toward
becoming members or partners.
    Valorem Law is a law firm that focused initially on the online
collaboration among remote lawyers, but has begun to integrate
additional cloud-based methods of communication to communicate
with clients online. 79 Valorem Law is a business litigation law
firm, but it is also a recognized leader in the legal profession for

Closer Look at Clearspire, PRISM LEGAL (Sept. 25, 2011, 12:02 PM),
       D.C. RULES OF PROF’L CONDUCT R. 5.4 (2012), available at
      See The New Model, supra note 74.
      See Changing “The System,” CLEARSPIRE,
system (last visited Feb. 23, 2012) (“Within the typical firm, partner profits
account for more than 30% of the balance sheet. Another third supports lavish
office overhead. The remaining third pays the salaries of the firm’s lawyers who
actually do the client work. In sum, nearly two thirds of the firm’s hourly rate
offers little direct value to the client.”); The New Model, supra note 74 (“Our
unique structure enables attorneys to focus on practicing law, while seasoned
business leaders manage the infrastructure and delivery of legal services.
Connecting the two, Clearspire’s IT platform provides some of the industry’s
most advanced technologies and IT methodologies, enabling our lawyers to
work more closely with clients and with each other, while simultaneously
streamlining the management of the business.”).
      See The New Model, supra note 74.
      See VALOREM L. GRP., (last visited Feb. 23,
                    13 N.C. J.L. & TECH. ON. 165, 180
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promoting the shift away from the billable hour over to value
billing. 80 The firm provides clients with the ability to make a
“value adjustment” to their agreed upon legal fee on the final
invoice, and its alternative fee arrangements and customer-friendly
firm culture has had a significant impact on the development of
     Burton Law LLC is an MJVF based in Ohio that has combined
alternative fee arrangements with greater cost savings through the
use of technology to deliver better client-focused services.82 The
firm also uses a virtual receptionist, virtual assistant, and has its
online social network on Yammer83 to help maintain a firm-wide
culture among associates who are practicing in different cities and
who only occasionally meet in person. 84 As with many of the
MJVF models, each associate focuses on a different practice area
so that the firm is able to refer cases between members and pool
resources for the marketing and online branding of the firm, which
will generate future clients.85

       We Provide Value or You Adjust Our Fees, VALOREM L. GRP., (last visited Feb.
23, 2012).
      Id. For example, Heritage Law combines the convenience of online access
for clients with value pricing, including pre-agreed flat fees, monthly payments,
a one-time fee limited within a specific time frame, or hourly but with a price
cap depending on what billing arrangement the lawyer and client agree upon.
Value Pricing, HERITAGE L.,
priced-law/ (last visited Feb. 23, 2012); see supra notes 55–56 and
accompanying text.
      See BURTON L. LLC, (last visited Jan. 23,
2012). Burton Law uses Clio, a legal SaaS technology, to communicate with
each other and clients, and each new member of the firm is provided with an
iPad to encourage cloud-based work. See CLIO, (last
visited Feb. 23, 2012).
       See YAMMER, (last visited Jan. 23, 2012)
(“Collaborate with your coworkers. Yammer is the free private social network
for your company.”).
      See id.
      See BURTON L. LLC, supra note 82.
                    13 N.C. J.L. & TECH. ON. 165, 181
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C. Traditional Law Practice Model
    Another model of MJVF takes the approach of delivering legal
services online for basic legal services while maintaining a
traditional, in-person law practice for clients that require more
complex legal and personal communication or for litigation-based
work that requires appearances at a courthouse. 86 For example,
Hargrove Madden is a MJVF based in Louisville, Kentucky that
has expanded into twenty-three states as of the beginning of
2012.87 The firm provides online legal service delivery to clients in
the form of document assembly and automation tools on an “online
practice platform.”88 Prospective clients may select the basic estate
planning services they desire and complete the online worksheet.89
The law firm receives the completed legal form and information
from the online client and then proceeds to work with the client
from that point on.90 The firm employs associates in each of the
states where it provides services and those attorneys are the ones
who review the online estate planning client matters that are within
their jurisdiction. 91 For more complex estate planning legal
      It is important to note that several nonprofit legal services organizations
have created online self-help systems for pro se litigants and court systems
across the country are now allowing for video testimony and jury trials that are
streamed. This does not require physical presence in the courtroom. It is
possible that this trend will continue to spread enabling additional court-based
use of technology that will increase the ability of MJVFs to handle litigation-
based matters when the lawyer and client are not physically able to travel to the
courthouse proceedings. Questions relating to the efficacy and “zealousness” of
this type of representation are not within the scope of this article. See LAWHELP
INTERACTIVE, (last visited Feb. 23, 2012). See
generally Jerry Goldman, Courts and Information Technology: A Predictably
Uneasy Relationship, 55 LOY. L. REV. 235 (2009); Gregory J. Morse, Techno-
Jury: Techniques in Verbal and Visual Persuasion, 54 N.Y.L. SCH. L. REV. 241
      HARGROVE MADDEN, (last visited Feb. 23,
2012); Offices, HARGROVE MADDEN, (last
visited Feb. 23, 2012).
       See The Hargrove Madden LLP Online Estate Planning Platform,
HARGROVE MADDEN, (last visited
Feb. 23, 2012).
      See id.
      See id.
      See Offices, supra note 87.
                   13 N.C. J.L. & TECH. ON. 165, 182
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services, the firm operates traditional law offices where those
clients may meet with the firm’s lawyers in person.92
    McGrath & Spielberger, PLLC is a MJVF that provides
services in Florida, Georgia, North Carolina, Ohio, South Carolina,
and Tennessee while maintaining physical offices in Florida, South
Carolina, and North Carolina. 93 The firm uses document
automation and assembly tools combined with a secure client
portal to provide basic, unbundled legal services to clients online
in a variety of practice areas.94 The technology allows the client to
provide data online to the system, which generates a legal
document for the lawyer to review and edit online. 95 The four
lawyers of McGrath & Spielberger are licensed in multiple
jurisdictions and rely on the cloud-based technology to procure and
work with clients outside of their geographic location.96

D. Solo and Small Firm Model
    Solo and small firm practices that provide more general
practice services—such as estate planning, family law,
landlord/tenant, and basic business services—are facing increased
competition from nonlawyer legal service companies such as
LegalZoom and RocketLawyer.97 In order to compete in this new
      See id.
visited Feb. 23, 2012); see Contact Us, MCGRATH & SPIELBERGER, PLLC, (last visited Feb. 23, 2012).
      See MyLegalAffairs, MCGRATH & SPIELBERGER, PLLC, https://www.client (last visited Feb. 23, 2012);
MCGRATH & SPIELBERGER, PLLC, supra note 93. See generally How to Sell
Your Firm’s Legal Services Online, DIRECTLAW,
DirectLaw%20Brochure1.pdf (last visited Feb. 23, 2012).
      See What is DirectLaw?, DIRECTLAW,
directlaw.asp (last visited Feb. 23, 2012).
      Who We Are, MCGRATH & SPIELBERGER, PLLC, http://mcgrathspielberger.
com/who-we-are-attorneys/mcgrath-and-spielberger-attorneys-lawyers        (last
visited May 4, 2012).
      LEGALZOOM, supra note 21; ROCKET LAWYER, supra note 22. See
generally Chris Johnson, Leveraging Technology to Deliver Legal Services, 23
HARV. J.L. & TECH. 259 (2009) (discussing the development of legal services
companies delivering legal services online); Richard Granat, What Lawyers Can
Learn From LegalZoom, ELAWYERING BLOG (Sept. 29, 2010),
                    13 N.C. J.L. & TECH. ON. 165, 183
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legal marketplace and to take back some of the public’s desire to
find assistance online, some solo and small firms with lawyers who
are licensed to practice in more than one state are opening MJVFs
as a way to expand their client base across borders. For example,
Frame Legal, LLC is operated by Kelly Frame who resides in
South Carolina, but is licensed to practice in South Carolina,
Illinois, and Georgia. 98 As a solo practitioner, Frame is able to
expand his potential client base across multiple states, giving him a
significant competitive advantage over other solo practices which
are limited by geographic boundaries. Harrill Law Firm is another
example of a solo practitioner who has developed a MJVF that
delivers services both in California and in North Carolina where its
owner, Jonathan Harrill, is licensed.99 The firm uses a secure client
portal to expand services from one coast to the other to deliver
legal services online and even has separate online registration and
login buttons for each jurisdiction.100

E. Benefits of These Models
    As the legal marketplace becomes even more crowded, the
number of these smaller MJVFs is expected to increase, in many
cases as a matter of economic survival. 101 Additionally as the
number of these firms increases, their ability to generate online
leads of potential clients to their online offerings will become more
challenging. Many of them may choose to team up with other
lawyers to form larger MJVFs with varied practice areas that pool

can-learn-from-legal zoom/.
      Kelly Frame, Attorney, FRAME LEGAL, LLC,
law-firm/business-attorney.aspx (last visited Jan. 20, 2012).
       Attorney Profile, HARRILL L.,
profile.asp (last visited Jan. 20, 2012).
       See HARRILL L., (last visited Jan.
20, 2012).
       See, e.g., Jordan Furlong, The Rise of the Super Boutique, LAW21.CA (Aug.
19, 2011),;
Katheryn Hayes Tucker, Virtual Law Firms Stay Afloat in Tough Times,
LAWJOBS.COM NEWS & VIEWS (May 26, 2009, 12:00 AM),
                    13 N.C. J.L. & TECH. ON. 165, 184
                           Regulatory Barriers
resources and referral sources, or they may close up their online
marketing efforts and focus on developing more niche law
practices that provide the online offerings as an amenity to their
clients, but not as the primary form of legal service delivery.
    Of the MJVFs in the United States, the majority appear to be
focused on transactional work, primarily for corporate or business
clients or clients with intellectual property law needs.102 The client
base for these firms does not appear to be individuals in the lower
to moderate income levels at this point.103 However, some of these
firms that maintain traditional law offices are adding virtual offices
to provide basic legal services, such as estate planning and no-
contest divorces, to create an additional revenue stream for the
firm that taps into the growing market of individuals of moderate
income levels seeking online legal services. 104 Immigration law
and intellectual property law practices bear unique potential, as
federal law practices expand more easily with virtual practice than
state-based practice areas because they may expand their online
client base into multiple states rather than being restricted to only
the state’s jurisdiction in which they have been admitted to practice
law. In practice areas where a firm is supplementing the virtual
offerings with traditional, in-person representation, the potential
for the use of technology is not limited to any particular practice

       An informal survey of the practice area designations of the MJVFs
mentioned in this article indicated that a majority of them provide services in the
following practice areas: Internet law, intellectual property law, technology and
commercial transactions, mergers and acquisitions, startup law, financial
services, and ecommerce law, among other specific forms of business or
corporate-related legal needs.
       AXIOM, (last visited
Mar. 28, 2012). Additionally, most individuals of lower to moderate means are
seeking legal services related to practice areas that are not business-related. See
available at
(noting that the majority of unbundled legal services, delivered online or off,
tend to be in the areas of family law, bankruptcy, housing, and community law,
although any practice area may be modified to serve the needs of individuals of
lower and moderate income levels).
       See discussion supra Part III.C.
                 13 N.C. J.L. & TECH. ON. 165, 185
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    What all of these developing models of virtual law firms have
in common is their ability to use technology to reduce the cost of
legal services to clients and to expand their firm’s services across
geographic boundaries. The potential benefit of this form of law
practice is increased access to justice for the public in general, as
well as access to greater specialized legal attention from lawyers
who may have more experience in handling their particular legal
matter. For the legal profession, these models encourage lawyers
to use technology as a time saver so that the lawyers may focus on
the actual practice of law and the relationship with the client while
moving away from the more administrative tasks of operating a
business and counting the minutes of a billable hour. This renewed
emphasis on the value of lawyering and increased legal service
delivery with technology has the potential to turn around the
current downward spiral of the legal marketplace. Accordingly, it
is critical that lawyers address the potential barriers to the creation
of additional and new models of MJVFs and ensure that any future
modifications to ABA and state-based rules and regulations do not
have a chilling effect on this progress.

                  IV. RULE BARRIERS TO MJVFS
    There are several potential barriers to the development and
operation of MJVFs. When a law firm considers expanding into
other jurisdictions with the use of technology that would create a
virtual presence in other states, the firm must consider the
following issues that might expose it to risk with another state’s
regulatory body:
    • advertising and marketing restrictions,
    • the unauthorized practice of law (“UPL”) and any
        requirements to maintain a physical office building in
        another state,
    • the ability to take credit card payments online,
    • restrictions on website development and design,
    • technology and security requirements for the use of cloud
        computing and in protecting confidential law office data,
    • referral fees and networking across borders,
                   13 N.C. J.L. & TECH. ON. 165, 186
                          Regulatory Barriers
    •   the ability to create alternative business structures that
        allow nonlawyer ownership in a law firm,
    • how their malpractice insurance carrier will address the
        virtual expansion,
    • differing state requirements for providing unbundled legal
        services online,
    • the monitoring of virtual assistants, virtual paralegals, and
        other legal process outsources over the Internet, and
    • conflicts of interest and choice of law and disciplinary
        authority over the firm.
There will be ethics opinions that address these issues in some
states, but others will lack them.105 Or, there will be more specific
requirements in ethics opinions in one state where others will
dictate only “reasonable care.”106
    Clearly, for a MJVF where the lawyers are geographically
based in a single state but expanding out virtually, the state bar
rules and regulations will be more specific and restrictive.
Alternatively, if the firm is a virtual network of lawyers each with
his or her own jurisdiction, each individual lawyer must follow the
rules associated with his or her license to practice but will have to
decide which state’s laws apply to matters that concern the firm as
a whole, such as the use of outsourcing. In order for a MJVF to
maintain compliance with multiple rules and regulations, it may be
necessary for the firm to retain a firm administrator in charge of
oversight to avoid noncompliance with ethics issues and to keep up
with each state’s evolving definitions and rules related to the use of
technology and alternative practice methods by its members.107
    The ABA’s Commission on Ethics 20/20 will complete its
review of many of these issues in 2012 and has published several
proposed changes to the Model Rules that the states may or may

      See discussion infra Part IV.B.
      See discussion infra Part IV.D.
      See generally Elizabeth Chambliss & David B. Wilkins, The Emerging
Role of Ethics Advisors, General Counsel, and Other Compliance Specialists in
Large Law Firms, 44 ARIZ. L. REV. 559 (2002) (discussing the increasing role of
ethics advisers and compliance counselors in law firms).
                    13 N.C. J.L. & TECH. ON. 165, 187
                           Regulatory Barriers
not choose to adopt or modify.108 As law firms such as MJVFs
push the limits of practice management over the course of the next
few years, the interpretation and adoption of the rules discussed
below will be critical to future innovation in the delivery of legal

A. Unauthorized Practice of Law
   The issue of unauthorized practice of law raises unique
compliance issues for MJVFs. Model Rule 5.5 (a)–(b) states:
    (a) A lawyer shall not practice law in a jurisdiction in violation of the
    regulation of the legal profession in that jurisdiction, or assist another
    in doing so. (b) A lawyer who is not admitted to practice in this
    jurisdiction shall not: (1) except as authorized by these Rules or other
    law, establish an office or other systematic and continuous presence in
    this jurisdiction for the practice of law; or (2) hold out to the public or
    otherwise represent that the lawyer is admitted to practice law in this
    To provide a brief background, the ABA created a Task Force
on the Model Definition of the Practice of Law in 2002 to
reevaluate the definition of “practice” based on the changes in our
legal marketplace and also to examine the unauthorized practice of
law by non-licensed individuals, such as legal service companies
providing legal forms and documents without attorney review.110
The study resulted in the Task Force’s failure to recommend a
single model definition.111 Instead, they recommended that every
state and jurisdiction adopt its own definition of the practice of

       A.B.A. Commission on Ethics 20/20, A.B.A.,
groups/professional_responsibility/aba_commission_on_ethics_20_20.html (last
visited Feb. 23, 2012).
        MODEL RULES OF PROF’L CONDUCT R. 5.5 (2006), available at
       Id. at 3.
                    13 N.C. J.L. & TECH. ON. 165, 188
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law. 112 This has led to inconsistency in the definition of the
practice of law in the states and has made the determination of
what constitutes unauthorized practice of law more difficult for
MJVFs concerned with compliance.113
    What defines the “practice of law” in an age of cloud-based
legal service delivery? It is not only a question of the law firm
delivering services over the Internet across geographic boundaries
but also about technology, such as artificial intelligence, that may
be used to do a significant portion of the preparatory work for a
lawyer and provide free self-help legal assistance even without the
involvement of a lawyer.114
    Addressing some of these issues is the most referenced case
related to technology and the unauthorized practice of law,
Unauthorized Practice of Law Committee v. Parsons Technology,
Inc. 115 Parsons is an example of a state attempting to regulate

DEFINITION OF THE PRACTICE OF LAW 1 (2003), available at
1–3 (2011), available at
       See, e.g., LAWHELP INTERACTIVE, supra note 86; FAIR OUTCOMES, (last visited Jan. 14, 2012) (providing an online
self-help solution using a system based on game theory to help individual
negotiate and reach settlement online).
       No. CIV.A. 3:97CV-2859H, 1999 WL 47235 (N.D. Tex. Jan. 22, 1999),
vacated, 179 F.3d 956 (5th Cir. 1999); see also Williamson v. John D. Quinn
Const. Corp., 537 F. Supp. 613 (S.D.N.Y. 1982); Birbrower, Montalbano,
Condon & Frank, P.C. v. Superior Court, 949 P.2d 1, 12–13 (Cal. 1998)
(holding in part that the definition of “practice law in California” restricted
practice to lawyers who are members of the state bar and that the firm violated
the California statute by practicing law in that state when it used lawyers who
were not licensed in California to represent a California client); Estate of
Condon v. McHenry, 76 Cal. Rptr. 2d 922, 925 (Ct. App. 1998) (examining an
out-of-state law firm that was not licensed to practice law in California but
performed legal services by “either physically or virtually” entering the state on
behalf of an out of state client who had a California-law-related matter). The
court in Estate of Condon defined “virtual presence” as “entry into the state of
California by telephone, fax, e-mail, satellite or any other means of
                   13 N.C. J.L. & TECH. ON. 165, 189
                          Regulatory Barriers
different forms of legal technology, particularly those that are
interactive with the public seeking legal assistance and is an
example of the protectionism that tends to permeate state-based
regulations on the legal profession.116 In Parsons, Texas sought to
prohibit self-help legal software from being sold in the state. 117
Protestations from the legal technology industry over the
proceedings resulted in a modification of the definition of Texas’
unauthorized practice of law statute to clarify that the “practice of
law” does not include computer software as long as the software
clearly states that the product is not a substitute for the services of
a lawyer.118
    This case appears to be the standard that a MJVF must use to
determine what constitutes “practice of law” when it comes to
using Internet-based technology tools to gather and generate legal
documents for the firm’s clients. For example, a MJVF firm may
provide a free, online self-help application for the public on its
website that generates legal documents or it may release a
smartphone or tablet application to the public that provides this
service. Instead of generating a legal document, perhaps the firm
releases a web advisor or web calculator providing general legal
advice based on the data entered by the individual. 119 These
software applications carry the disclaimer that the free self-help
tool is not a substitute for the services of the law firm. The MJVF
uses these tools as part of its marketing strategy, hoping to convert
the prospective user of the software to paying clients already
empowered with the basic legal education and perhaps legal
documents related to their legal needs. Based on Parsons, as long
as the disclaimer is there, the firm is not engaging in the

communication when a person outside of the state of California communicates
with one within.” Estate of Condon, 76 Cal. Rptr. 2d at 925 n.6.
      See Parsons, 1999 WL 47235, at *1–*3.
      See id.
      TEX. GOV’T CODE ANN. § 81.101 (West 1999); RICHARD ZITRIN ET AL.,
LEGAL ETHICS IN THE PRACTICE OF LAW 815–16 (2d ed. 2002) (discussing the
legal self-help industry’s response to the ruling in the Parsons case).
      See, e.g., A2J Author, IIT CHICAGO-KENT C. L.,
cajt/A2JAuthor.html (last visited Feb. 23, 2012); NC Child Support Calculator,
ROSEN L. FIRM, (last visited Feb. 14,
                    13 N.C. J.L. & TECH. ON. 165, 190
                           Regulatory Barriers
unauthorized practice of law in another state by hosting a software
application for a prospective client who may be geographically
located in a state where the firm does not have a physical presence.
    Ten years ago when lawyers first began using the Internet to
communicate with potential clients and to advertise their services,
there was significant debate about the use of different software
applications and forms of digital communication.120 At this point,
the legal profession has conceded that digital communication is no
different than any other form of communication between lawyers
and clients in terms of our ethical obligations to protect client
confidentiality and to protect the public.121 The current debate is
less about the form of digital communication and more focused on
the enforcement of rules and regulations to protect the public as
lawyers use the technology to reach across jurisdictions. As
acknowledged even back in 2002 by an ABA Commission on
Multijurisdictional Practice: “[t]he state-based licensing process
originated more than two centuries ago when the need for legal
services was locally based and often involved the need for
representation in court.” 122 Ecommerce and globalization of the
economy has permanently altered the need for legal service
delivery to be locally based.
    The question of what constitutes unauthorized practice of law
differs with almost each state because of how they define “practice
of law.”123 Most states allow for pro hac vice124 admission for court

       See generally Joel Michael Schwarz, Practicing Law Over the Internet:
Sometimes Practice Doesn’t Make Perfect, 14 HARV. J.L. & TECH. 657 (2001)
(discussing everything from IRC chat rooms to advice websites used by lawyers
to communicate with the public).
       Law Practice Management Section: eLawyering Task Force, A.B.A., (last visited
Mar. 24, 2012) (defining eLawyering as encompassing all the ways in which
lawyers can do their work using the Web and associated technologies).
MULTIJURISDICTIONAL PRACTICE 7 (2002), available at http://www.american migrated/cpr/mjp/intro_cover.authcheckdam.pdf.
       See, e.g., ALA. CODE §§ 34-3-6 to -7 (2011); FLA. STAT. ANN. § 454.23
(West 2012); TEX. PENAL CODE ANN. § 38.123 (West 1993).
       A lawyer not admitted to a state bar but who is eligible to practice law in
another state may act as pro hac vice counsel in a limited capacity. See Pro Hac
                   13 N.C. J.L. & TECH. ON. 165, 191
                          Regulatory Barriers
appearances, but in regards to transactional work or other
unbundled legal services, those of which are more likely to be
delivered online by a MJVF, states are more diverse in what they
will allow.125 Some states, such as Virginia and Michigan, have
adopted rules that allow for the delivery of temporary legal
services not related to litigation to be handled in their states by
licensed lawyers outside of their jurisdiction.126 Other states have
made exceptions for in-house counsel of corporations or other
lawyers who will be providing services under the oversight of an
organization or entity. 127 The lawyers falling under these
provisions must typically register with the state bar allowing them
to practice in the jurisdiction and be held under the authority of
their disciplinary and regulatory board. For lawyers and MJVFs
that do not fall under these state allowances, they may deal with
unauthorized practice of law risks by bringing in a lawyer licensed
in that state early in the representation to advise on state-based
issues and to “collaborate” if not “supervise” the work.128
    For a MJVF, attempting to comply with multiple definitions
and determining what is allowed and not allowed more than likely
causes confusion and deters the development of MJVFs across the
States. The standard set in Parsons remains the primary guidepost
for the use of technology to provide legal services across
jurisdictions, but the scenario in the case itself did not directly

Vice, ST. B. CAL.,
Vice.aspx (last visited Mar. 29, 2012).
      See La Tanya James & Siyeon Lee, Adapting the Unauthorized Practice of
Law Provisions to Modern Legal Practice, 14 GEO. J. LEGAL ETHICS 1135,
1139–41 (2001); Carol A. Needham, Negotiating Multi-State Transactions:
Reflections on Prohibiting the Unauthorized Practice of Law, 12 ST. LOUIS U.
PUB. L. REV. 113, 123 (1993).
      MICH. COMP. LAWS ANN. § 600.916 (2000); VA. STATE BAR RULES OF
PROF’L CONDUCT R.5.5 (2009).
      See, e.g., In re Opinion 33 of the Committee on the Unauthorized Practice
of Law, 733 A.2d 478 (N.J. 1999); CAL. RULES OF COURT R. 9.43 (2012);
IDAHO BAR COMM’N RULES R. 225–28 (2011).
      See, e.g., Office of Disciplinary Counsel v. Pavlik, 732 N.E.2d 985 (Ohio
2000); Torrey v. Leesburg Regional Med. Ctr., 769 So.2d 1040 (Fla. 2000).
                   13 N.C. J.L. & TECH. ON. 165, 192
                          Regulatory Barriers
address the same situation as the services delivered by a MJVF.129
To address the risk of committing unauthorized practice of law in
other jurisdictions, most firms are simply exhibiting clear notices
and disclaimers on their law firm websites and indicating which
states the firm is able to provide state-based services on any free
legal forms, web advisors, or calculators.130 Additionally, some of
the firms may use technologies that provide a jurisdiction check
that will send a red flag notice to the law firm when a client
registers who may have a legal issue that the firm is not licensed to
handle.131 The firm may then check the legal matter for state-based
relevance and continue to work with the client if possible. This
form of UPL check in the technology is useful in practice, but may
not help the law firms working to convince other state bars that
they are not committing UPL. For example, if a client of the law
firm is geographically based in a state where the law firm does not
have a firm member or a relationship with outside counsel who is
licensed to practice law in that state, but the law firm handles a
federal law matter for the client or works with a lawyer in that state
to create a legal document, what is the firm’s presence in that state
in terms of practicing law? Does a virtual presence count in the
same way under Rule 5.5?
    More recently, on September 7, 2011, the ABA Commission
on Ethics 20/20 published an Initial Resolution to Model Rule
5.5(d)(3) (“Resolution”) regarding continuous and systematic
presence. 132 Comment 4 of Rule 5.5 discusses systematic and

       See Unauthorized Practice of Law Comm. v. Parsons Tech., Inc., No.
CIV.A. 3:97CV-2859H, 1999 WL 47235, at *1 (N.D. Tex. Jan. 22, 1999),
vacated, 179 F.3d 956 (5th Cir. 1999).
       See, e.g., Terms of Use and Privacy Policy, HARGROVE MADDEN, (last visited Mar. 24, 2012);
Legal Disclaimer, ROSEN LAW FIRM,
(last visited Mar. 24, 2012).
        See Practice Platform Management Features, TOTALATTORNEYS,     (last
visited Mar. 24, 2012).
RULE 5.5 (D)(3) (2011), available at
                    13 N.C. J.L. & TECH. ON. 165, 193
                           Regulatory Barriers
continuous presence as established in a jurisdiction by a lawyer
who is not admitted to practice in that state.133 The Commission’s
intent, as noted in the report following the Resolution, is to help
lawyers determine when their “non-physical” presence might be
classified as “systematic and continuous.”134 The Resolution also
clarifies that legal services may be delivered online to clients in
other jurisdictions on occasion as long as the law firm is in
compliance with Rule 5.5(c).135 This section of the rule currently
states that:
    A lawyer admitted in another United States jurisdiction, and not
    disbarred or suspended from practice in any jurisdiction, may provide
    legal services on a temporary basis in this jurisdiction that: (1) are
    undertaken in association with a lawyer who is admitted to practice in
    this jurisdiction and who actively participates in the matter; (2) are in or
    reasonably related to a pending or potential proceeding before a
    tribunal in this or another jurisdiction, if the lawyer, or a person the
    lawyer is assisting, is authorized by law or order to appear in such
    proceeding or reasonably expects to be so authorized; (3) are in or
    reasonably related to a pending or potential arbitration, mediation, or
    other alternative dispute resolution proceeding in this or another
    jurisdiction, if the services arise out of or are reasonably related to the
    lawyer’s practice in a jurisdiction in which the lawyer is admitted to
    practice and are not services for which the forum requires pro hac vice
    admission; or (4) are not within paragraphs (c)(2) or (c)(3) and arise out
    of or are reasonably related to the lawyer’s practice in a jurisdiction in
    which the lawyer is admitted to practice.136
The Resolution proposes this additional language and restructuring
of the last paragraph of Comment 4:
    For example, a lawyer may direct electronic or other forms of
    communications to potential clients in this jurisdiction and
    consequently establish a substantial practice representing clients in this
    jurisdiction, but without a physical presence here. At some point, such
    a virtual presence in this jurisdiction may become systematic and
    continuous within the meaning of Rule 5.5(b)(1). Moreover, a lawyer
    violates paragraph (b)(2) if the lawyer is not admitted to practice in this

      Id. at 6.
      Id. at 6.
      Id. at 6–7.
      MODEL RULES OF PROF’L CONDUCT R. 5.5 (2006).
                    13 N.C. J.L. & TECH. ON. 165, 194
                           Regulatory Barriers
    jurisdiction and holds out to the public or otherwise represents that the
    lawyer is admitted to practice law in this jurisdiction.137
    The Commission stated in its Resolution that it was not
possible for them to be precise in this area because the
Commission could not “clearly define the line between a
permissible temporary practice in a jurisdiction and an
impermissible systematic and continuous presence.”138 However,
the Commission’s intent in creating the additions to Comment 4 of
Rule 5.5 was to provide guidance to lawyers who choose to use
cloud computing for law practice that expands across multiple
jurisdictions. 139 For a MJVF, the clarification in the comments
make it clear that having an online client portal that serves clients
in another jurisdiction constitutes “systematic and continuous
presence” under Rule 5.5 in that state, and that to avoid the
unauthorized practice of law, the firm must have a lawyer licensed
to practice law in that jurisdiction who is handling the case and
ensuring compliance with any other rules or regulations of that
state. It will be up to the state bars to adopt any modifications or
clarifications to their version of Rule 5.5 or to the comments of
their rules. Otherwise, it remains unclear from state to state at
what point a MJVF’s online presence becomes the practice of law
that violates an unauthorized practice of law statute.140

       See AM. BAR ASS’N COMM. ON ETHICS 20/20, supra note 132, at 2–3.
       Id. at 12.
       See Memorandum from ABA Comm. on Ethics 20/20 Working Grp. on
Uniformity, Choice of Law, and Conflicts of Interest to ABA Entities, Courts,
Bar Ass’ns (state, local, specialty, and int’l), Law Schools, Disciplinary
Agencies, Individuals, and Entities 1 (Mar. 29, 2011), available at
sues_paper.authcheckdam.pdf. In its initial review of multijurisdictional
practices, the Commission explored alternative approaches, including the
Colorado Bar’s Rule 220 allows any attorney licensed in the U.S. to practice in
the state, the European Union’s System of Mutual Recognition, and Australia
and Canada’s licensure systems. Id. at 5–7.
       Some states have residency requirements and “bona fide office” rules that
MJVFs must navigate when setting up the structure of their firm online and with
the addition of any physical office locations. See, e.g., N.J. State Bar Advisory
Comm. on Prof’l Ethics & Comm. on Lawyer Adver., Joint Op. 718/41 (2010),
available at; see
also Ekaterina Schoenefeld v. State of New York, et al., No. 1:09-CV-00504,
                    13 N.C. J.L. & TECH. ON. 165, 195
                           Regulatory Barriers
B. Marketing Rules and Online Advertising Restrictions
    MJVFs must be careful to navigate a variety of differing
advertising and marketing rules within the states where they
deliver legal services online. For a MJVF and indeed for most
private practitioners, the use of online advertising and marketing
strategies is necessary in order to remain competitive in a crowded
legal marketplace. For a MJVF that establishes the attorney-client
relationship from an online client portal, recruiting potential clients
through its website is the primary method of client development.
In order to generate the necessary number of potential clients, or
leads, to sustain this form of law practice, a MJVF must focus on
driving traffic to and increasing the visibility of the website in
Internet search results.141 The firm may also benefit from different
forms of online directories, listings or web-based lead generation
services. Each of these methods will require interpretation of
different states’ rules and ethics opinions related to marketing.
    To address the modern need of law firms to focus on online
marketing, the ABA Model Rules 7.1–7.5, related to marketing,
were updated in 2002 to cover advertising by electronic
communication.142 Specifically, Rule 7.2 was updated to include a
comment describing the Internet as an example of electronic
media.143 Rule 7.2 (a) states that “[s]ubject to the requirements of
Rules 7.1 and 7.3, a lawyer may advertise services through written,
recorded or electronic communication, including public media.”144
Model Rule 7.3 was also updated at this time to include real-time

2011 WL 3957282 (N.D.N.Y. Sept. 7, 2011) (creating a residency requirement
and was found unconstitutional for infringing on an attorney’s right to practice);
MICH. COMP. LAWS § 600.946(2) (2010) (requiring out-of-state lawyers to
maintain an office and to practice actively in the state or teach the law); MO.
SUPREME COURT RULES R. 9.02 (1980), available at
322874955f13886256ca6005211a7?OpenDocument (requiring that the out-of-
state lawyers have a local office, unless the state where the lawyer resides allows
out-of-state lawyers to practice without a local office).
       See Richard Granat, Successful Virtual Law Practices, DIRECTLAW (2011),
       MODEL RULES OF PROF’L CONDUCT R. 7.1–7.5 (2002).
       Id. at R. 7.2.
                    13 N.C. J.L. & TECH. ON. 165, 196
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electronic communication, such as the use of chat rooms or within
virtual reality environments. 145 Section (c) of Rule 7.3 requires
    Every…electronic communication from a lawyer soliciting professional
    employment from a prospective client known to be in need of legal
    services in a particular matter shall include the words ‘Advertising
    Material’ … at the beginning and ending of any recorded or electronic
    communication, unless the recipient of the communication is a person
    specified in paragraphs (a)(1) or (a)(2).146
    These are the latest updates to the Model Rules related to
lawyer advertising. However, MJVFs are left to figure out how to
apply these Rules to forms of online communication with
prospective clients through client portals and other methods. For
example, the firm has to determine what types of disclaimers
would need to be posted when using a particular form of electronic
communication. Because state bars will differ in their solicitations
rules, MJVFs must first research each of the states in which they
may be communicating online with potential clients. The clearest
method of compliance for the MJVF is to design its website and
any online presence so that it is clear to the public which
jurisdictions it serves. However, from that point on, different
forms of online marketing, including use of social media by a law
firm, fall into a gray area of interpretation.
    More specific forms of online advertising that may be useful to
MJVFs have come under examination recently from different state
bars. For example, Groupon is a marketing method that allows
businesses to post “daily deals” online offering discounts to
customers if they respond within a specific timeframe.147 So far,
only South Carolina, North Carolina and New York have issued
ethics opinions related to this unique form of online advertising
specifically permitting lawyers in their jurisdiction to use it. 148
       Id. at R. 7.3. Rule 7.3 prohibits direct solicitation to prospective clients
and often works in conjunction with Model Rule 1.18 regarding the duty to
prospective clients. Id.
       See GROUPON, (last visited Feb. 13, 2012).
        S.C. State Bar, Formal Ethics Op. 11-05 (2011), available at
/ArticleId/1012/Ethics-Advisory-Opinion-11-05.aspx; N.C. State Bar, 2011
                    13 N.C. J.L. & TECH. ON. 165, 197
                           Regulatory Barriers
However, each of these states has slightly different restrictions for
the use of this type of advertising. Consequently, a MJVF licensed
in NC, SC, or NY as well as other states that wished to make use
of the daily deal form of advertising would have to develop
separate marketing plans for use in each state based on its
interpretation of the rules in states that have not issued specific
opinions on the method.
    The interpretation of Rule 7.2 has also created debate for
MJVFs wishing to use online marketing. Section (b) of Rule 7.2
    A lawyer shall not give anything of value to a person for
    recommending the lawyer's services except that a lawyer may (1) pay
    the reasonable costs of advertisements or communications permitted by
    this Rule; (2) pay the usual charges of a legal service plan or a not-for-
    profit or qualified lawyer referral service. A qualified lawyer referral
    service is a lawyer referral service that has been approved by an
    appropriate regulatory authority; (3) pay for a law practice in
    accordance with Rule 1.17; and (4) refer clients to another lawyer or a
    nonlawyer professional pursuant to an agreement not otherwise
    prohibited under these Rules that provides for the other person to refer
    clients or customers to the lawyer, if (i) the reciprocal referral
    agreement is not exclusive, and (ii) the client is informed of the
    existence and nature of the agreement.149
Pay-per-click or performance-based marketing are two popular
methods of online lawyer marketing used by MJVFs to provide
arguably more cost-effective results than traditional marketing or
even more passive forms of online marketing. The use of Google
AdWords, which is one form of pay-per-click advertising, has
recently found its way into a proposed NC ethics opinion and has
been returned to a subcommittee multiple times while lawyers and
MJVFs that are licensed in North Carolina continue to make use of
the advertising method.150

Formal Ethics Op. 10 (2011), available at
ethics.asp?page=15&keywords=website; N.Y. State Bar Assoc. Comm. on
Prof’l Ehtics, Op. 897 (2011), available at
ContentFolders/EthicsOpinions/Opinions825present/EO_897.pdf (last visited
Jan. 20, 2012).
      See N.C. ST. B., PROPOSED 2010 FORMAL ETHICS OPINION 14 (Jan. 26,
2012), available at
                   13 N.C. J.L. & TECH. ON. 165, 198
                          Regulatory Barriers
    A related dispute began in 2009 when an ethics complaint was
filed in Connecticut against five attorneys using the Total
Attorneys 151 network, a cloud-based legal service provider that
provides a form of lead generation for law firms who pay for their
pay-per-click methods.152 The ethics complaint alleged marketing
ethics violations pertaining to the company’s methods.153 All of
the complaints, including the Connecticut complaint, were
dismissed by November 2011 and the investigations were closed
with either “no finding” or a “finding of no wrongdoing,”
permitting the company and the lawyers in each state who were
using this method to continue doing so.154 Zelotes v. Rousseau155
was an important development in the states’ interpretation of
online marketing because, for the first time, clearer distinctions
were made between referral sites, directory listings, and other
forms of lead generation marketing used by lawyers. 156
Furthermore, the process of having the matter go through each
state’s regulatory body exhibits the time and expense that a MJVF
with interests in multiple states would have to go through in order
to get approval or defend their use of a single online advertising
method. In the Zelotes case, the technology vendor that provided
the lawyers with the marketing service paid for legal representation
for some of the lawyers.157 Such defense would be cost prohibitive

        Grow, TOTAL ATT’YS,
?campaign_id=701C0000000gtsZ/ (last visited Apr. 5, 2012).
       Conn. Statewide Grievance Comm., Memorandum of Decision on
Repspondent’s Motion to Dismiss, Grievance Complaint Nos. 09-0412, 09-
0414, 09-0415, 09-0416, 09-0418 (Feb. 8, 2010), available at
       See Robert Ambrogi, Another Ethics Panel Clears Total Attorneys,
LAWSITES (Mar. 18, 2010),
ethics-panel-clears-total.html; Stephanie Kimbro, Update on the Ethics of
Performance-Based Marketing, TOTAL ATT’YS BLOG (Mar. 07, 2012, 12:54
      Conn. Statewide Grievance Comm., supra note 152.
      Id. at 6–9.
        Carolyn Elefant, Persecuted Connecticut Lawyers Totally Well
Represented on Ethics Charges by Pullman & Comley; Total Attorneys, Not So
                   13 N.C. J.L. & TECH. ON. 165, 199
                          Regulatory Barriers
for a MJVF. Even then, state bars reviewing the differences
between marketing methods and how each complies with state bar
advertising rules may not come to the same conclusions. The
issues involved in the Zelotes matter took two years to resolve and
in the meantime, additional online advertising methods and
technology for marketing a MJVF have emerged that contain other
nuances that may not clearly be interpreted by a law firm in their
states’ advertising rules.
    Differing treatment of lawyer online marketing and advertising
rules among the states seems even more impractical given that the
original intent of such rules was to protect the interests of the
public. The majority of the public now conducts a significant
portion of their purchases and transactions online. 158 They may
earn degrees, bank, invest, and shop online. Consumers are
empowered to use online tools such as Yelp159 and other review
sites to rate and provide feedback on various vendors and products
that they purchase. Consumers may also use the same review
websites to locate and read comments regarding the services of law
firms. However, the assumption that remains at the core of most
ethics opinions related to lawyer advertising is that the consumer is
not empowered to select or educate themselves on the variety of
options available for handling their legal matters. This assumption
seems flawed when the Internet has provided increased access to
general legal information and free online self-help tools so that the
average consumer is not approaching their lawyer completely
ignorant of the legal process and what is involved in resolving their
legal needs.
    Unfortunately, because ethics committees and regulatory
entities have been slow to re-examine the premises for most

Much, MYSHINGLE.COM (Nov. 7, 2009),
      See Thad Rueter, Online shoppers spending more, but are less patient
about site problems, INTERNET RETAILER (Oct. 1, 2010, 2:43 PM). See
generally Evan Lieber and Chad Syverson, Online vs. Offline Competition,
UNIV.     OF      CHI.,
(discussing interplay between online and offline markets).
      YELP, (last visited Feb. 14, 2012).
                   13 N.C. J.L. & TECH. ON. 165, 200
                          Regulatory Barriers
advertising ethics rules or to address issues related to new forms of
online marketing, it has kept some MJVFs from showing up in the
same online searches when the public goes to the Internet to locate
legal assistance. Firms may be hesitant to interpret existing lawyer
advertising rules and unwilling to wait for their regulatory body to
address the issue in an ethics opinion or to provide some informal
guidance.160 This makes it increasingly difficult for a MJVF to add
new forms of online marketing to its strategy for expansion across
jurisdictions and to remain competitive in the legal marketplace.

C. Referral Restrictions Across Borders
    A branded network concept is a nonlawyer legal service
company that markets directly to consumers and allows lawyers to
sign up as part of a referral directory.161 Though there are several
variations on the model, the basic underlying premise is that the
lawyer pays to be part of the network, and as the consumer
completes the free or low-cost legal document, he or she may then
choose to be matched to a lawyer in his or her jurisdiction who
may assist them further.162 The lawyer who is part of the network
may work with the client online, over the phone or in person.
    Under Model Rule 5.4, lawyers may not provide anything of
value in exchange for a referral to a client.163 However, under the
structure of a branded network, the payment of fees by the lawyer
to the branded network legal services company for the referral
service and the payment may be based on a future fee that the
lawyer receives from the client. Unfortunately, many state bars
have not addressed all of the ethics issues surrounding this model,
       See generally Will Hornsby, Lawyers Shouldn’t Have To Guess on Ethics
of Online Marketing, MICH. LAW. WKLY., Aug. 18, 2008, at 1 (noting that
regulation in this area amounts to “unchartered territory”).
         See, e.g., LEGALZOOM, supra note 21; MYLAWYER.COM, (last visited Feb. 14, 2012); ROCKET LAWYER,
supra note 22. All of these sites market their brand directly to consumers and
allow the consumers at some point in the process to select to work with a
licensed lawyer in their jurisdiction.
        See James Careless, The virtual lawyer, CBA PRACTICELINK,      (last
visited May 7, 2012).
       MODEL RULES OF PROF’L CONDUCT R. 5.4 (2006).
                   13 N.C. J.L. & TECH. ON. 165, 201
                          Regulatory Barriers
including the process the company may or may not have developed
to establish the online attorney-client relationship for lawyers in its
    Branded networks have the capability to expand across
geographic boundaries to advertise online to the public without the
same restrictions as lawyers forming a MJVF. Rather than locate a
MJVF, a member of the public may choose to go with the
company that has greater national name recognition, contending
that the legal services provided online from that company would
equal that provided by a licensed lawyer. This puts the MJVF at a
disadvantage by causing them to lose potential revenue from these
online clients. MJVFs may choose to join these networks, but it
would have a large impact if the firm itself were able to provide
similar services to potential clients in its jurisdictions without the
fear of discipline in the form of disbarment from a regulatory
entity—a fear that the nonlegal service company does not face.164
    For the public, the inability to find legal services from a MJVF
online decreases their options for legal service assistance, allowing
nonlegal service companies with large marketing budgets to
position themselves as the more convenient and cost-effective
solution.     This positioning may also heighten the public’s
perception of the legal profession as unwilling to adapt to changes
in technology and what is needed to adequately provide assistance
to the public. Allowing MJVFs more clarity in their ability to take
referrals and create networks online, even with other MJVFs and
even in potential collaboration with branded network concepts,

     Nonlawyer legal service companies face their own risks in the pursuit of
this model. For example, LegalZoom has undergone a number of trials with
claims of unauthorized practice of law from Missouri, Alabama, North Carolina
and Washington. See Rachel M. Zahorsky, Alabama Bar Group Files Suit to
Ban LegalZoom, ABA J. (Jul. 15, 2011),
news/article/alabama_lawyer_group_files_suit_to_ban_legalzoom/;         Gene
Quinn, LegalZoom Sued in Class Action for Unauthorized Law Practice, IP
WATCHDOG (Feb. 9, 2010, 4:04 PM),
Washington Attorney General zooms in on LegalZoom’s claims, WASH. ST. OFF.
ATT’Y GEN., (Sept. 16, 2010),
                    13 N.C. J.L. & TECH. ON. 165, 202
                           Regulatory Barriers
would help to combat this image of a legal profession with its head
in the sand and increase higher quality access to justice.

D. Differing Rules on the Use of Technology in Law Practice
    ABA Model Rule 1.6(a) “Confidentiality of Information”
states: “[a] lawyer shall not reveal information relating to the
representation of a client unless the client gives informed consent,
the disclosure is impliedly authorized in order to carry out the
representation or the disclosure is permitted by paragraph (b).”165
Comment 17 to the Rule contains the lawyer’s duty of “reasonable
care” to protect confidential information: “[w]hen transmitting a
communication that includes information relating to the
representation of a client, the lawyer must take reasonable
precautions to prevent the information from coming into the hands
of unintended recipients.”166
    To further aid the lawyer in understanding how to use
reasonable care in protecting confidential information, the
comment provides:
    This duty, however, does not require that the lawyer use special
    security measures if the method of communication affords a reasonable
    expectation of privacy. Special circumstances, however, may warrant
    special precautions. Factors to be considered in determining the
    reasonableness of the lawyer’s expectation of confidentiality include
    the sensitivity of the information and the extent to which the privacy of
    the communication is protected by law or by a confidentiality
    Many state bars have adopted a similar version of 1.6(a) and
comment 17.168 More specific direction about the application of
this rule to current technology both by the ABA and with state bars
has been found in the creation of updated ethics opinions. A
MJVF must interpret these multiple ethics opinions and determine

      MODEL RULES OF PROF’L CONDUCT R. 1.6(a) (2006).
      Id. at R.1.6(a) cmt. 17.
PROF’L CONDUCT R. 1.6, available at
                    13 N.C. J.L. & TECH. ON. 165, 203
                           Regulatory Barriers
which rule applies the highest standard that it must follow for use
of its chosen technology across the states where it serves clients.
    In August 2011, the ABA Standing Committee on Ethics and
Professional Responsibility issued its Formal Opinion 11-459. 169
This opinion generated debate about whether it required all
lawyers to communicate with clients only through encrypted email
and online transactions.170 Framed in the context of the workplace
environment, the opinion counsels lawyers not to communicate via
email to clients who may be using email at their workplace when
there is a risk that their employer may review their
communications using keylogging or other spyware methods. 171
However, the language of the opinion broadens the risk outside of
the workplace to any third-party access to the email.172
    While many states allow for the use of email communication
with clients, any form of unencrypted email runs the risk of access
by a third-party.173 Accordingly, some lawyers may interpret this

       See ABA Standing Comm. on Ethics and Prof’l Responsibility, Formal Op.
11-459 (2012), available at
       See Nicole Black, Emails between lawyer and client and the risk of third
party access, SUI GENERIS (Sept. 7, 2011),
party-access.html; Jack Newton, Are email’s days numbered?, SLAW (Sept. 12,
2011),; Allison
Shield, Attorney-Client Confidentiality and Email, LAWYERIST.COM (Sept. 21,
       See ABA Standing Comm., supra note 169.
       See ABA Comm. on Ethics and Prof’l Responsibility, Formal Op. 99-413
(1999) (permitting use of email between lawyers and clients which several other
states wrote into their own ethics opinions). Some states have ethics opinions
that allow for the use of email to transfer confidential client information. See,
e.g., State Bar of Alaska Bar Assoc. Ethics Comm., Op. 98-2, (1998), available
at; State Bar of Ariz.
Comm. on the Rules of Prof’l Conduct, Op. 97-04 (1997), available at; State Bar of Cal.
Comm. on Prof’l Responsibility & Conduct, Formal Op. 2007-174 (2007),
available at
%3d&tabid=836; State Bar of Wis., Ethics Op. E-00-03 (2000), available at
                    13 N.C. J.L. & TECH. ON. 165, 204
                           Regulatory Barriers
opinion as the first step towards requiring encrypted
communications of confidential data.174 Though no states currently
require encryption, several have issued ethics opinions related to
the use of technology in law practice that contain different
standards and requirements for protecting confidential information.
For example, the California State Bar published an ethics opinion
(“California Opinion”) in December 2010 which discussed the use
of technology in law practice, specifically addressing the
attorney’s duty of confidentiality to clients when using technology
that may be accessed by a third party. 175 This would include
everything from a law firm’s use of wireless to the creation of a
MJVF that is completely cloud-based and stores and transmits law
office data online.176 Most state bar ethics opinions related to cloud
computing, SaaS, or generally any third-party hosting of law office
data, will cite its state bar’s version of Rule 1.6(a) and the
“reasonable care” standard. 177 They will then provide, as
California’s Opinion cited above states, that “[w]hether an attorney
violates his or her duties of confidentiality and competence when
using technology to transmit or store confidential client
information will depend on the particular technology being used
       See Black, supra note 170.
       State Bar of Cal., Comm. On Prof’l Responsibility & Conduct, Formal Op.
2010-179 (2010), available at
       See id.
       See, e.g., State Bar of Ariz., Ethics Op. 09-04 (Dec. 2009) (stating in Rule
1.6(a) that “[a] lawyer shall not reveal information relating to the representation
of a client unless the client gives informed consent, the disclosure is impliedly
authorized in order to carry out the representation or the disclosure is permitted
or required by paragraphs (b), (c) or (d) or ER 3.3(a)(3)”). In its conclusion that
lawyers should use reasonable care, the opinion states:
      Other bar associations have recognized that the duty to take reasonable
      precautions does not require a guarantee that the system will be
      invulnerable to unauthorized access . . . . Instead, the lawyer “is
      required to exercise sound professional judgment on the steps
      necessary to secure client confidences against foreseeable attempts at
      unauthorized access.”
Id. (quoting State Bar of N.J., Ethics Op. 701 (Apr. 10, 2006)).
                    13 N.C. J.L. & TECH. ON. 165, 205
                           Regulatory Barriers
and the circumstances surrounding such use.”178 From that point,
the state bar ethics opinions vary in what they consider appropriate
steps to make this determination. For example, California’s
Opinion asks attorneys to take steps to evaluate a number of
factors before using a particular technology, including: the level of
security of the technology, the impact on the client by a failure of
the technology’s security, and “the legal ramifications to a third
party who intercepts . . . the . . . information.”179 The Opinion then
goes into more specific detail regarding each step and is the first
ethics opinion published in the United States which specifically
asserts that a lawyer should not use public wireless to conduct
confidential transactions given the security risk that this poses.180
Other ethics opinions do not mention specific forms of technology,
such as the use of wireless.181 Instead, these opinions focus on the
lawyer’s process of conducting due diligence in researching the
technology provider before entrusting confidential information to
them.      For example, the Pennsylvania Bar Association’s
Committee        On      Legal         Ethics     And     Professional
Responsibility published a Formal Opinion listing specific items
that the lawyer must ensure are present in the service level
agreement with the technology provider before using the
technology in law practice. 182 The Pennsylvania Opinion also

       State Bar of Cal. Comm. On Prof’l Responsibility & Conduct, Formal Op.
2010-179, at 1 (2010), available at
       Id. at 7.
        At the time of this writing, the following states have drafted ethics
opinions relating to cloud computing or “third-party hosting of law office data:”
Alabama, Virginia, and Vermont. See Ala. Ethics Comm., Op. 2010-02 (2010),
available at; Va. State Bar’s
Standing Comm. on Legal Ethics, Op. 1818 (Sept. 30, 2005), available at; Vt. Bar Assoc., Advisory Ethics Op.
2003-03 (2003), available at
es%20of%20the%20Client/03-03.pdf (discussing law firms’ use of an outside
computer consultant to handle database files containing confidential client
       See State Bar of Pa. Comm. On Legal Ethics and Prof’l Responsibility,
Formal Op. 2011-200 (2011), available at
                   13 N.C. J.L. & TECH. ON. 165, 206
                          Regulatory Barriers
references a proposed North Carolina Bar Ethics Opinion on the
use of SaaS in law practice that imposes a specific set of minimum
requirements for the use of SaaS in law practice. 183 The now
adopted North Carolina Ethics Opinion presents the “reasonable
care” standard with a few suggestions, as opposed to requirements,
and leaves the lawyer responsible to conduct due diligence in
researching their technology and provider to ensure compliance
with Rule 1.6(a).184
    Unfortunately, a MJVF planning on practicing in both North
Carolina and Pennsylvania would read both opinions and have to
determine which standard applies to its use of the technology that
creates the firm’s structure and delivers services online to clients.
While it may be true that underlying each of these states’ opinions

content/uploads/2011/11/2011-200-Cloud-Computing.pdf. For example, the
Pennsylvania Opinion suggests that the lawyer verify that the technology
     [E]xplicitly agrees that it has no ownership or security interest in the
     data; has an enforceable obligation to preserve security; will notify the
     lawyer if requested to produce data to a third party, and provide the
     lawyer with the ability to respond to the request before the provider
     produces the requested information; has technology built to withstand a
     reasonably foreseeable attempt to infiltrate data, including penetration
     testing; includes in its “Terms of Service” or “Service Level
     Agreement” an agreement about how confidential client information
     will be handled; provides the firm with right to audit the provider’s
     security procedures and to obtain copies of any security audits
     performed; will host the firm’s data only within a specified geographic
     area. If by agreement, the data are hosted outside of the United States,
     the law firm must determine that the hosting jurisdiction has privacy
     laws, data security laws, and protections against unlawful search and
     seizure that are as rigorous as those of the United States and
     Pennsylvania; provides a method of retrieving data if the lawyer
     terminates use of the SaaS product, the SaaS vendor goes out of
     business, or the service otherwise has a break in continuity; and,
     provides the ability for the law firm to get data “off” of the vendor’s or
     third party data hosting company’s servers for the firm’s own use or in-
     house backup offline.
Id. at 9.
       Id. at 18; see also N.C. State Bar, 2011 Formal Ethics Op. 6 (Jan. 27,
2012), available at
      N.C. State Bar, supra note 183.
                   13 N.C. J.L. & TECH. ON. 165, 207
                          Regulatory Barriers
on the use of technology in law practice is the attorney’s duty to
exercise reasonable care, in the event of a malpractice claim
against a MJVF, what the state defines as reasonable based on their
ethics opinions, even if they are just “suggested” requirements,
would make a difference.
    Rather than include technical requirements in an ethics
opinion, acknowledging that these quickly become outdated, some
states are instead creating separate educational resources for
lawyers to learn more about these issues. 185 In addition to the
dangers of codifying technology standards that would become
outdated is the fact that some lawyers may read the ethics opinion
on record and comply only with any listed requirements or
warning, consequently neglecting to stay informed on the security
and technology issues necessary to ethically operate a law practice,
even if all they are doing is using a mobile device to communicate
with clients. Regardless, the subtle differences in the approach to
each state’s interpretation of Model Rule 1.6(a) may create
difficulties for the formation of MJVFs, as well as potentially
hinder the growth of existing firms.
    On September 19, 2011, the ABA Commission on Ethics 20/20
published its Revised Proposal regarding Technology and
Confidentiality. 186 The proposal discusses the Commission’s
review of the use of technology by lawyers to transmit and store
confidential information.187 It also included proposed changes to
Model Rules 1.6 and a report regarding the Commission's
decisions to make the proposed modifications. 188 Proposed
changes to Model Rule 1.6 include the addition of several factors

TECHNOLOGY         AND     CONFIDENTIALITY      (2011),      available    at
                    13 N.C. J.L. & TECH. ON. 165, 208
                           Regulatory Barriers
to assist lawyers in determining whether their effort is
“reasonable.”189 In general, the proposed changes provide clarity
for attorneys attempting to understand what “reasonable care”
entails, without providing specific technology requirements or
minimum standards. The Commission held another public hearing
to address these and other proposed changes to the Model Rules on
February 2, 2012 in New Orleans.190 It remains unclear, however,
whether the ABA will adopt these changes and, even so, if state
bars will follow suit.
    International MJVFs must also consider the implications of the
Patriot Act and other countries’ data privacy laws.191 For example,
a Washington-based MJVF that wants to conduct business in
Canada may need to obtain a technology provider that houses the
data on servers located in Canada in order to comply with
Canadian client confidentiality laws.192 Also, the Law Society of
British Columbia has warned that the United States Patriot Act
may operate to prohibit lawyers from being in compliance with
their duties to protect client confidentiality if they choose to store
law office data on servers within the United States.193 Accordingly,
some have proposed constructing a private cloud for Canadian Bar

       The factors include: “sensitivity of the information, the likelihood of
disclosure if additional safeguards are not employed, the cost of employing
additional safeguards, the difficulty of implementing the safeguards, and the
extent to which the safeguards adversely affect the lawyer’s ability to represent
clients.” Id.
COMMISSION ON ETHICS 20/20 1 (2012), available at http://www.american
       See USA Patriot Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001);
Council Directive 95/46, 1995 O.J. (L 281) 31 (EC), available at; Council Directive
2002/58, 2002 O.J. (L 201) 37 (EC), available at http://eur-
                   13 N.C. J.L. & TECH. ON. 165, 209
                          Regulatory Barriers
members to store law office data from across its provinces. 194
Again, this would cause some difficulty for MJVFs wanting to
expand into Canada or may require that data for international
clients be housed in a server in that country while the data for
clients in the United States is housed on another server located in
the United States.195
    While at this point there are no state bar ethics opinions that
dictate that law office data must be stored on services located in
the United States, there is still some question about whether this is
a risk given the data privacy laws of other countries and
international laws that might govern the return of data should
anything happen to the technology provider or hosting company in
those foreign countries.196 Several MJVFs also create their own
customized systems for delivering legal services online to clients,
creating a virtual law office environment. 197 The more trusted
hosting companies in the industry maintain data centers that are
located in other countries and it is not often possible to request a
specific geographic location for servers.         These companies
occasionally need to reallocate resources and transfer data from
one server location to another. Accordingly, if a MJVF begins
using a technology and invests in developing a system around a
provider and hosting company’s existing resources, it would be
expensive for the firm to have to relocate all of its data to centers

       Id. at 29.
       For example, the Pennsylvania State Bar has suggested that one of the
requirements for the technology provider is that they:
      [W]ill host the firm’s data only within a specified geographic area. If
      by agreement, the data are hosted outside of the United States, the law
      firm must determine that the hosting jurisdiction has privacy laws, data
      security laws, and protections against unlawful search and seizure that
      are as rigorous as those of the United States and Pennsylvania.
See State Bar of Pa. Comm. on Legal Ethics and Prof’l Responsibility supra
note, 182. North Carolina’s proposed Ethics Opinion for 2012 includes a similar
statement as one of the minimum requirements for conducting due diligence of a
technology provider before the proposed opinion was revised. See N.C. State
Bar, supra note 183.
       See discussion of Axiom Legal, Hargrove Madden, and Rimon supra Part
                    13 N.C. J.L. & TECH. ON. 165, 210
                           Regulatory Barriers
located within the United States and even more difficult to host the
data at centers within each state where the firm conducted
business. This is not the way that cloud computing operates as a
business model, and it would not be cost-effective for technology
providers and hosting companies to make exceptions for the legal
    Until the state bars uniformly determine that a standard of
“reasonable care” is the best way to approach the use of
technology in law practice under Rule 1.6(a), as the ABA
Commission on Ethics 20/20 Working Group on the Implications
of New Technologies determined in its Issues Paper Concerning
Client Confidentiality and Lawyers’ Use of Technology,
compliance with the rules will leave MJVFs uncertain when
considering the risk they want to take in developing innovative
forms of online legal service delivery.

E. Use of Outsourcing by a MJVF
   Publication of ABA Formal Opinion 08-451 facilitated the
growth of outsourcing, a process that has allowed small and
medium sized firms to expand into MJVP by retaining contract
lawyers or assigning document review or creation tasks to offshore
      In a letter to the N.C. State Bar, the Legal Cloud Computing Association
(LCCA) stated that the proposed minimum requirement that law office data be
hosted at a data center demands that there must be “privacy laws, data security
laws, and protections against unlawful search and seizure that are as rigorous as
those of the United States and the state of North Carolina.” See Letter from The
Legal Cloud Computing Association to Alice Neece Mine, North Carolina State
Bar (July 15, 2011), available at http://www.legalcloudcomputing
The LCCA further explained that:
     Most software vendors will not restrict their server locations, many of
     which are geo-redundant to begin with, to hosting data centers located
     only in locations with laws as strict as the US and the state of North
     Carolina. Many of these vendors have long-standing relationships with
     trusted hosting companies. How would this restriction impact larger
     law firms with branches in the State as well as branches overseas
     where it may make more sense to have one of their servers located
     closer to the overseas location than further away in the US?
     Furthermore, multiple geographic locations minimize risk of data loss.
                    13 N.C. J.L. & TECH. ON. 165, 211
                           Regulatory Barriers
providers.199 Because of a lack of clarity in the rules, some firms
will treat foreign lawyers as nonlawyer assistants in order to avoid
unauthorized practice of law claims. 200 However, outsourcing
raises not only unauthorized practice of law issues, but a wave of
ethical issues that have been discussed throughout this piece.201
    Several state bars have published opinions related to
outsourcing to address these concerns, but most have not yet issued
an opinion on the subject or have updated comments to their
version of Model Rule 5.3 governing supervision of nonlawyer
assistants.202 Rule 5.3(b) provides that lawyers who have retained
nonlawyers must “make reasonable efforts to ensure that the
person’s conduct is compatible with the professional obligations of
the lawyer.”203 A MJVF may employ the services of legal process
outsourcers (“LPO”) to handle projects, but will have to be aware
of each state’s approach to outsourcing as well as discern and
comply with the state with the strictest interpretation of Model
Rule 5.3.
    Potentially raising additional questions, on September 19,
2011, the ABA Commission on Ethics 20/20 published a revised
proposal regarding outsourcing which would change 5.3(b) related
to nonlawyer assistance outside a law firm to include “using an

       See ABA Comm. on Ethics and Prof’l Responsibility, Formal Op. 08-451
(2008), available at
       See Mark Tuft, Supervising Offshore Outsourcing of Legal Services in a
Global Environment: Re-examining Current Ethical Standards, 43 AKRON L.
REV. 825, 841 (2010).
       See generally Mary C. Daly & Carole Silver, Flattening the World of Legal
Services? The Ethical and Liability Minefields of Offshoring Legal and Law-
Related Services, 38 GEO. J. INT’L L. 401 (2007).
       See, e.g., N.C. State Bar, 2007 Formal Op. 12 (2008), available at; Prof’l Ethics of the Fl.
Bar, Op. 07-2 (2008), available at
nsf/SMTGT/ETHICS,%20OPINION%2007-2; The Assoc. of the Bar of the City
of N.Y. Comm. on Prof’l & Judicial Ethics, Formal Op. 2006-3 (2006),
available at
       MODEL RULES OF PROF’L CONDUCT R. 5.3 (2002).
                   13 N.C. J.L. & TECH. ON. 165, 212
                          Regulatory Barriers
Internet-based service to store client information.”204 MJVFs use
cloud computing (which falls under “Internet-based service”) to
handle outsourcing and manage work with LPOs. 205 Under this
proposed addition to the rule, the very technology that is used to
create the structure of a MJVF would constitute nonlawyer
assistance, thereby requiring supervision and monitoring under
Rule 5.3.206 Any law firm’s use of a cloud computing application
that is used in the delivery of legal services to clients online would
fall under this proposed change to the rule. If this addition is
adopted, it will be interesting to see if state bars adopt similar
inclusion of cloud computing as a form of outsourcing in their
rules and how MJVFs will interpret these rules in terms of their
ethical obligations to monitor their technology vendors in the same
way they would an LPO.207

F. Conflicts of Interest, Choice of Law, and Disciplinary
    Related to the issue of compliance with differing state rules is a
MJVF’s interpretation of Model Rule 8.5 covering disciplinary
authority and Rule 1.7 covering conflicts of interest.208 There are

OUTSOURCING 3 (2011), available at
       The proposed comment to Rule 5.3 provides the following guidance but
does not discuss or interpret the distinction between the ability to actively
supervise and monitor a cloud-based technology (a non-human entity being used
to create and deliver legal services) and an individual providing outsourced
     The extent of this obligation will depend upon the circumstances,
     including the education, experience and reputation of the nonlawyer;
     the nature of the services involved; the terms of any arrangements
     concerning the protection of client information; and the legal and
     ethical environments of the jurisdictions in which the services will be
     performed, particularly with regard to confidentiality.
Id. at 4.
       MODEL RULES OF PROF’L CONDUCT R. 8.5, 1.7 (1983). See generally
Daly, supra note 3.
                    13 N.C. J.L. & TECH. ON. 165, 213
                           Regulatory Barriers
several examples of where these rules may come into play for a
MJVF. The firm may want to expand into a jurisdiction, such as
Washington, D.C., that allows for alternative business structures
for law firms, including nonlawyer ownership in firms, but would
be unsure whether the sharing of fees with nonlawyers outside of
that jurisdiction would be permissible.209 A MJVF may have one
branch located in a state that would impute a conflict of interest
that one attorney in the firm has on all the attorneys in the firm,
thus limiting the ability of its lawyers in other jurisdictions
(including overseas) to work with that client. A MJVF may have
firm members licensed in different states collaborating on a case
where the state’s differing attorney-client privilege pose a dilemma
of whether the firm is required to disclose the fraud it has
discovered its client presented or whether it must keep that
information confidential.210 In each of these examples, the MJVF
is left to decide which state’s laws will apply with little guidance
and significant risk that incorrect interpretation or choice will
subject the firm’s attorneys to discipline.
    Model Rule 8.5(b)(2) provides that “[a] lawyer shall not be
subject to discipline if the lawyer’s conduct conforms to the rules
of a jurisdiction in which the lawyer reasonably believes the
predominant effect of the lawyer’s conduct will occur.” 211
Comment 5 to Rule 8.5 states:
    When a lawyer’s conduct involves significant contacts with more than
    one jurisdiction, it may not be clear whether the predominant effect of
    the lawyer’s conduct will occur in a jurisdiction other than the one in
    which the conduct occurred. So long as the lawyer’s conduct conforms
    to the rules of a jurisdiction in which the lawyer reasonably believes the
    predominant effect will occur, the lawyer shall not be subject to
    discipline under this Rule.212

       See discussion of Clearspire supra Part III.
thcheckdam.pdf (providing multiple scenarios that might involve a MJVF).
       MODEL RULES OF PROF’L CONDUCT R. 8.5(b)(2) (2011).
       Id. at R. 8.5, cmt. 5.
                   13 N.C. J.L. & TECH. ON. 165, 214
                          Regulatory Barriers
Model Rule 1.7 covers the client-lawyer relationship with regards
to a lawyer making the determination of whether or not he or she
may represent the client due to a conflict of interest.213
    Under the ABA Model Rules for Lawyer Disciplinary
Enforcement Rule 22, many states allow reciprocity to disciplinary
decisions rendered in other jurisdictions.214 The ABA encourages
this by maintaining a National Lawyer Regulatory Data Bank that
provides information regarding lawyer disciplinary records across
the country. 215 However, MJVFs must still interpret Rule 8.5,
comment 5, and Rule 1.7 when questioning which jurisdiction’s
rules of professional conduct will apply to a legal matter.
    To address this issue, the ABA Commission on Ethics 20/20
brought up several sample situations where the rule might be
interpreted in a paper entitled “Choice of Law in Cross-Border
Practice.”216 One of these situations specifically referred to virtual
law offices serving clients located within a state other than that in
which the attorney was physically located. 217 Other potential
scenarios included multijurisdictional and international law offices
providing online delivery of legal services to clients across
jurisdictions. 218 With lawyers and clients working with MJVFs
scattered across the states, this raised the issue of which
jurisdiction’s laws apply.219 As discussed above, if the MJVF has
difficulty in determining which state’s rules or ethics opinions bear
the most demanding compliance requirements, or which states
conflict of interest rules should be applied, this subjects them to
potential liability in multiple states. And if the MJVF has

      Id. at R. 1.7.
      National Lawyer Regulatory Data Bank, A.B.A., http://www.american (last visited
Jan. 20, 2012).
UNIFORMITY, supra note 210.
      Id. at 2.
      Id. at 2–4.
      See generally Daniel Backer, Choice of Law in Online Legal Ethics:
Changing a Vague Standard for Lawyer Advertising on the Internet, 70
FORDHAM L. REV. 2409, 2410–17 (2002).
                   13 N.C. J.L. & TECH. ON. 165, 215
                          Regulatory Barriers
difficulty in the first place determining exactly where the legal
representation occurs for the purposes of Rule 8.5(b) when the
lawyer and client working together online across jurisdictions, this
exposes them to even more risk.
    In an attempt to clarify some of the issues surrounding
multijurisdictional practice, the Commission has published
proposed changes to Rules 1.7 and 5.4. First, on September 7,
2011, the ABA Commission on Ethics 20/20 published an Initial
Proposal regarding Choice of Law and Conflicts of Interest.220 The
Commission proposed to add a comment to Model Rule 1.7 that
would provide clarity with regards to the choice of law issues.221
Regarding conflicts of interest, the proposed comment would allow
a lawyer to perform work in multiple jurisdictions where conflict
rules differ and the lawyer and client may agree that their
relationship will be governed by the conflict rules of a particular
jurisdiction. 222 The Commission received some concern in
comments regarding the proposed addition of comment 23 to Rule
1.7.223 However, at the time of this writing, it has neither revised
nor adopted these proposed changes.
    Second, the Commission addressed the situation that occurs
when a MJVF has questions about working with nonlawyers that it
has retained in other jurisdictions who may be providing work that
is then used in the production of legal services for clients.
Addressing this question, the Commission proposed a new section
to Rule 5.4 regarding fee sharing with nonlawyers, providing that:

OF    LAW AND CONFLICTS OF INTEREST (Sept. 7, 2011), available at
       See id. at 6, cmt. 23.
CHOICE OF LAW AND CONFLICTS OF INTEREST (Nov. 11, 2011), available at
                     13 N.C. J.L. & TECH. ON. 165, 216
                            Regulatory Barriers
      [A] lawyer may share legal fees with a nonlawyer in the lawyer’s firm
      in a manner that is not otherwise permissible under this Rule, but only
      if the nonlawyer performs professional services that assist the firm in
      providing legal services to its clients and that form of fee sharing is
      permitted by the jurisdiction whose rules apply to the permissibility of
      fee sharing with the nonlawyer. See Rule 8.5(b).224
   The Commission’s report explained that its purpose for the
addition to Rule 1.7 was “to help lawyers and law firms resolve
choice of law problems that have arisen due to inconsistencies
among jurisdictions with regard to the question of dividing and
sharing fees with firms that are permitted to have nonlawyer
owners.”225 Further, the Commission stated “its proposals protect a
lawyer’s professional independence while giving appropriate
deference to jurisdictions that have decided to permit some form of
nonlawyer partnership or ownership in law firms.”226 This initial
proposal at the time of this writing was accepting comments and
would be revisited in a hearing of the Commission to be held in
New Orleans in February 2012.

G. Inconsistency in Rules Allowing for Unbundling of Legal
    One of the methods relied upon by MJVFs to deliver legal
services online comes in the form of unbundling or providing
limited scope legal services.227 ABA Model Rule 1.2(c) entitled
“Scope of Representation” allows for the unbundling of legal
services: “(c) [a] lawyer may limit the scope of the representation
if the limitation is reasonable under the circumstances and the
client gives informed consent.”228 At the time of this writing, more
4–5 (2011), available at
       Id. at 13.
       MODEL RULES OF PROF’L CONDUCT R.1.2(c), 6.5(a) (2011) (“(a) A lawyer
who, under the auspices of a program sponsored by a nonprofit organization or
court, provides short-term limited legal services to a client without expectation
                    13 N.C. J.L. & TECH. ON. 165, 217
                           Regulatory Barriers
than forty-two states have adopted either this version of the rule or
a similar rule allowing for the unbundling of legal services.229
    MJVFs intending to provide some form of unbundled services
to clients online must be careful to comply with differing states’
rules regarding the procedures for unbundling. Some states require
specific forms of limited scope engagement agreements and other
states will restrict unbundling of certain matters altogether. A
MJVF must be careful in the development of any limited scope
engagement agreement or online process that may be used to
unbundle with clients in different jurisdictions. This makes the
establishment of a single firm-wide procedure for unbundling legal
services online and use of a technology that facilitates unbundling
across the firm more challenging for a MJVF.

                         V. CONCLUSION
    The conflicting rules and regulations discussed above,
including questions of choice of law and jurisdiction, complicate
what the technology seeks to make easier. The increase of MJVPs
has the potential to expand the accessibility of legal services to the
public as well as reduce legal costs across the board. At a time
when the United States economy is in slow recovery, when the
legal profession and legal education face serious challenges, and
economists are even proposing the “deregulation of lawyers,”

by either the lawyer or the client that the lawyer will provide continuing
representation in the matter: (1) is subject to Rules 1.7 and 1.9(a) only if the
lawyer knows that the representation of the client involves a conflict of interest;
and (2) is subject to Rule 1.10 only if the lawyer knows that another lawyer
associated with the lawyer in a law firm is disqualified by Rule 1.7 or 1.9(a)
with respect to the matter.”).
1(2009), available at
downloads/prose_white_paper.pdf; see also AM. BAR ASS’N STANDING COMM.
nbundling_resource_center/court_rules.html (discussing the unbundling rules for
each state).
                   13 N.C. J.L. & TECH. ON. 165, 218
                          Regulatory Barriers
sustaining barriers to models that would increase legal service
delivery and reduce legal costs is difficult to defend.230
    This article has provided a basic background on several
different structures of MJVP. It has examined the different rules
that these firms must comply with and which may be holding back
the development of future innovative law firm structures and new
delivery methods. Finally, I would like to propose a few solutions
or first steps towards eliminating some of these barriers.
    Not only are lawyers more mobile, but our clients are as well,
moving and conducting business from state to state. We are no
longer an agrarian society limited to owning property attached to
the land. Many individuals today have jobs, family, property,
houses, investments and other interests scattered across several
states. Hiring multiple lawyers to handle each interest is not
practical for many reasons. For many clients—both individuals
and corporations—a relationship with a lawyer or law firm may be
life-long or long-term. The benefits of maintaining a business
relationship with the same counsel for many years not only means
more competent and zealous representation, but also saves the
client fees associated with having to educate and train a new legal
representative on their needs and prior legal matters.
    In many of the disciplinary cases involving the unauthorized
practice of law, the lawyer is providing legal services to a client
with whom he or she has already established an ongoing business
relationship. Typically, that client has moved out of the lawyer’s
jurisdiction and has asked the lawyer to continue providing
counsel. The lawyer attempts to do so by navigating another
state’s rules and regulations to determine if he or she may continue
to represent the client. With the accessibility of every state’s laws
online, there is no longer an argument that this lawyer cannot learn
how the client’s new state’s legal matter should be handled.

      Robert W. Crandell & Clifford Winston, Time to Deregulate the Practice
of Law, WALL ST. J. (Aug. 21, 2011, 11:35 PM), available at
92.html; see Clifford Winston, Are Law Schools and Bar Exams Necessary?,
N.Y. TIMES (Oct. 24, 2011), available at
                   13 N.C. J.L. & TECH. ON. 165, 219
                          Regulatory Barriers
Furthermore, with the accessibility of online lawyer mentors and
legal listservs of lawyers sharing their state-based experience, the
law firm wanting to continue to represent its clients outside of a
jurisdiction has ample opportunity to quickly become competent in
that state’s law for the purpose of handling transactional and other
legal guidance.
    At the core of these issues is the unspoken and almost heretical
(within the legal community) fact that there are individuals and
corporations who have not attended law school and who are not
licensed in any state to practice law who may nevertheless still
possess the competency necessary to provide certain legal services
to the public. 231 Should integrity and quality of legal work be
second to a state’s bar license or a geographic boundary line? Is
the importance of protecting state boundary lines more important
than increasing access to justice through alternative and equally
competent methods of legal service delivery?
    If regulation and oversight of legal service delivery is really the
issue, then why are so many members of the public resorting to
free, unrestricted websites to cut and paste together their legal
documents and searching through crowd sourced legal and Q&A
advice websites to get basic legal guidance? Would the lack of
barriers on MJVF’s create a “race to the bottom?” Or would it
mean fewer jobs for lawyers as more could be accomplished by
single law firms sharing resources and referrals across the states?
    As consumers drive the demand for increased delivery of legal
services online, they may also be the ones to insist upon changes in
law firm structure, choosing to retain the services of MJVFs that
use technology to cut costs over traditional firms. 232 Richard

       See Herbert M. Kritzer, The Future Role of “Law Workers”: Rethinking
The Forms of Legal Practice and the Scope of Legal Education, 44 ARIZ. L.
REV. 917, 918 (2002) (“[B]eing admitted to practice, and hence licensed to
provide any type of legal service within the geographic area of admission, has
little to do with competence to practice.”).
       Not only does the use of cloud computing cut down on overhead for a law
office’s technology, but it also reduces costs by allowing clients to work with
lawyers across borders without having to pay the fee for local counsel to avoid
potential unauthorized practice of law claims when that out of state lawyer had
                    13 N.C. J.L. & TECH. ON. 165, 220
                           Regulatory Barriers
Susskind and other prominent legal futurists have been preaching
this coming consumer-driven change in the legal profession for
over twenty years.233 Yet, lawyers in most states are the ones who
create the barriers for MJVF development. They are also the ones
holding on tightly to a payment and benefit structure that has
served them and their predecessors well for many years.
    Unfortunately, this inability to adapt may potentially place
American law firms at a disadvantage when they are unable to
compete in providing legal services against international MJVFs
that do not have the same restrictions.234 Unless lawyers who are
embarking on MJVFs play an active role in their state and the
ABA’s development of future rules and regulations that affect
technology in the practice of law, there is little chance that existing
barriers to MJVP will fall or that the rules will be clarified to
provide guidance rather than having a chilling effect.
    In the foreseeable future, lawyers operating MJVFs will remain
responsible for monitoring and taking a role in protesting the
adoption of rules and regulations on technology and practice
management that might limit their potential to deliver legal
services online and across borders. However, there are a couple of
emerging developments that may provide a first step towards
change. First, in April 2011, the International Legal Technology
Standards Organization (“ILTSO”) published a draft of standards
related to the use of technology in law practice.235 This non-profit
organization may provide a middle ground for guidance where

the requisite experience related to the client’s legal matter. See Gillers, supra
note 26, at 694 (discussing the benefits of relaxed rules).
NATURE OF LEGAL SERVICES 33–38 (2010). See generally RICHARD E.
       See generally Ann L. MacNaughton & Gary A. Munneke, Practicing Law
Across Geographic and Professional Borders: What Does the Future Hold?, 47
LOY. L. REV. 665, 689 (2001).
PROFESSIONALS (2011), available at
ILTSO%20Master%20Document%202011%20Final.pdf. The author of this
article currently sits on the advisory board of ILTSO and took part in the
finalization process of the standards before they were released in 2011.
                   13 N.C. J.L. & TECH. ON. 165, 221
                          Regulatory Barriers
differing ethics rules cause confusion. 236 The ILTSO standards
cover a wide range of technology issues with a strong focus on
cloud-based      technology,     mobile      devices   and    ethical
considerations.237 In the first quarter of 2012, ILTSO will offer the
ability for a technology vendor, lawyer, or law firm to self-assess
its compliance with these standards.238
     In the foreseeable future, the concept of a national bar is not
likely to happen because of the difficulty in enforcement. 239
However, there is a possibility for greater standardization of rules
and ethics opinions across the states as they become more aware of
MJVP and the potential benefits to the public from the increased
access to justice. ILTSO plans to share the standards with state
bars in the hopes that they may consider this resource as a useful
guide for members that might take the place of quickly-outdated
technology standards written into state-based ethics opinions. The
adoption of a set of standards like these by all of the state bars
would provide more stable guidance for MJVFs on ethics issues
related to protecting the confidentiality of client information. An
organization devoted to addressing technology in law practice
would also be able to provide updated information through social
media and listservs that deliver updates on security and technology
directly to MJVPs and state regulatory bodies.
     Second, entities with a financial interest in supporting the
growth of MJVFs, the technology vendors, may provide another
source of updated and more uniform guidance where existing rules
are contradictory or unclear. The Legal Cloud Computing
Association (“LCCA”) is an organization made up of legal
technology vendors who banded together after discovering that the
concerns regarding ethics rules by their customers and prospective
customers were similar.240 The members decided to collaborate to

      See id.
      See id.
Welcome.html (last visited Feb. 12, 2012).
      See Daly, supra note 3, at 781–85 (arguing against the creation of a
national bar).
         LEGAL    CLOUD       COMPUTING         ASS’N,  http://www.legalcloud (last visited Jan. 21. 2012).
                    13 N.C. J.L. & TECH. ON. 165, 222
                           Regulatory Barriers
address these concerns from the more technical standpoint of a
technology provider to help lawyers and their regulatory entities
understand the perspective of the technology vendor and what
constitutes “reasonable” and standard practice in the technology
industry.241 As mentioned herein, the LCCA has already responded
with comments to the Commission on Ethics 20/20 and to the
North Carolina State Bar Ethics Committee on issues related to
cloud computing in law practice.242
    Third, nonlawyer legal service companies, such as LegalZoom
and Rocket Lawyer, may be supportive in efforts made by MJVFs
seeking clarification of the definition of “practice of law” and
different state’s UPL rules.243 There may also exist the possibility
for collaboration between MJLFs and online branded networks as
discussed above. Both parties are now competing for clients in the
online legal marketplace even though, for the moment, the type of
legal work and practice areas that may be handled by each differ.
They are also both given the task of updating the state regulatory
bodies and understanding compliance issues in the delivery of
legal services online across borders.
    Fourth, on the state level, regulatory bodies, especially those
lawyers who serve on ethics committees, must be educated by their
members or perhaps a nonprofit like ILTSO on the basics of
technology and security. This education must be mandatory and
regularly updated on a quarterly basis for anyone sitting in a
position of writing and enforcing lawyer rules and ethics opinions.
There is a national initiative to educate law students about the use
of technology in practice and several state bars have added practice
management centers for members, which include resources related

      See id.
      See supra note 196 and accompanying text.
      In September 2011, LegalZoom filed suit against the North Carolina State
Bar asking it to declare that they are authorized to sell their online services in
the State because the State has failed to clarify for the company in the past
whether their sale of legal services in NC constituted UPL or was permissible.
Complaint for Declaratory and Injunctive Relief,, Inc. v. N.C.
State Bar, No. 11-CVS-015111 (N.C. 2011), available at
                    13 N.C. J.L. & TECH. ON. 165, 223
                           Regulatory Barriers
to the ethical use of technology in practice.244 Likewise, leaders of
state regulatory bodies need this mandatory digital education as it
applies to practice management.
    Additionally, states may need to reconsider their licensure
methods. For example, North Carolina’s reciprocity rule requires
that a lawyer have practiced in another state “physically” before
being eligible for admission by comity.245 This type of rule is out
of touch with the way lawyers are currently able to practice.
However, without increased technology education and awareness
for members of the regulatory bodies themselves, there will
continue to be a disconnect between practicing members of the bar
seeking guidance on ethics issues and regulators trying to enforce
rules that are no longer applicable to the current legal marketplace.
    Fifth, regulatory bodies need to acknowledge that the nature of
consumers seeking legal services has changed dramatically. The
public is more empowered than ever by access to the Internet.
Additionally, the public’s concept of accessibility has dramatically
changed. No longer does accessible mean being able to make an
appointment to meet with a lawyer in his or her office.
Accessibility means being able to communicate with the lawyer
online just as members of the public do with their friends, family,
and other professionals. The turnaround time on responding to
clients has also decreased with the ease of technology to speed up

           See      Educating         the     Digital      Lawyer,       LAWLAB, (last visited Jan. 21, 2012).
See e.g., About the Center for Practice Management, N.C. B. ASS’N, (last visited Feb. 11, 2012); S.C. B. PRAC.
PMAP.aspx (last visited Feb. 11, 2012).
       “In order to be eligible for admission by comity you must be able to
substantiate that you have been engaged in the full-time practice of law as your
principal means of livelihood and duly licensed in a reciprocal jurisdiction for at
least four out of the last six years; a minimal 48 months. You must be or have
been physically practicing in this jurisdiction.” Reciprocity Requirements For
Admission to Practice Law in North Carolina, N.C. B. ASS’N, (last visited Feb. 11, 2012) (go to “Comity” hyperlink on
left); see also Rules Governing the Admission to Practice Law in the State of
North Carolina—Section .0502, N.C. B. ASS’N,
RULES.htm (last visited on Feb. 11, 2012).
                    13 N.C. J.L. & TECH. ON. 165, 224
                           Regulatory Barriers
communications. This is a different image of the public than the
existing rules and regulations had in mind when they were created.
Accordingly, the basic premise of our rules needs to be updated.
    Resistance in adapting some of these potential solutions will
come from the usual suspects. States will argue that the
competency of legal services provided by individuals not located
in the state will decrease the quality of legal services to the
public—even though most law schools teach the Model Rules and
lawyers entering practice must then seek mentorship or self-teach
state-specific procedures and practices. There is no reason to
believe that practicing lawyers located out of state would provide
any lower quality of services. Lawyers who do not wish to engage
in multijurisdictional practice will provide protectionist arguments,
fearing the loss of revenue from clients who will have more choice.
They may argue that support of MJVP erodes the local legal
community, decreases local and state-based bar membership,
which decreases membership services and opportunities.
However, these arguments fail to acknowledge the benefits of
increasing access to justice through MJVP. The growth of MJVP
will continue to expand across the country to change the way that
we practice law and the way that the public receives legal services.
    Just as tighter restrictions are not the solution to these issues,
neither is deregulation of the legal profession. Exclusiveness in
the sharing of ethics opinions and other educational initiatives
among those in the legal profession is a step backwards in a society
that continues to move towards increased digital sharing.246 Better
coordinated communication, education, and collaboration among
different sectors of the legal community—law schools, private
practitioners, legal services vendors, nonlawyer legal service
companies, legal services organizations, state and national legal
regulatory bodies—is the first step towards the legal profession
     Note that several state bars publish their ethics opinions online only for
members of their bar, preventing others from reading the research and thought
process behind the rules and making it difficult for any form of standardization
among the states with regards to the treatment of technology in law practice.
See Latest Opinions, A.B.A,
responsibility/publications/ethics_opinions.html. (last visited Feb. 11, 2012); PA.
B. ASS’N, (last visited Feb. 11, 2012).
                 13 N.C. J.L. & TECH. ON. 165, 225
                        Regulatory Barriers
taking back control of its role in society. Enabling the growth of
MJVFs in their various structures and removing or clarifying
existing regulatory barriers to their development are critical steps
in this process.
13 N.C. J.L. & TECH. ON. 165, 226
       Regulatory Barriers

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